Filed Pursuant to General
Instruction II.L of Form F-10
File No. 333-257363
No securities regulatory
authority has expressed an opinion about these securities and it is
an offence to claim otherwise. This prospectus supplement, together
with the short form base shelf prospectus to which it relates dated
August 30, 2021, as amended or supplemented, and each document
incorporated or deemed to be incorporated by reference in this
prospectus supplement and the short form base shelf prospectus, as
amended or supplemented, constitutes a public offering of these
securities only in those jurisdictions where they may be lawfully
offered for sale and therein only by persons permitted to sell such
securities.
Information has been
incorporated by reference in this prospectus supplement and the
short form base shelf prospectus to which it relates dated August
30, 2021, as amended or supplemented, from documents filed with
securities commissions or similar authorities in Canada and with
the United States Securities and Exchange Commission. Copies of
the documents incorporated herein by reference may be obtained on
request without charge from the secretary of Organigram Holdings
Inc. at 1250-333 Bay Street, Toronto, ON, Canada, M5H 2R2,
Telephone (855) 961-9420, and are also available electronically at
www.sedar.com and www.sec.gov.
PROSPECTUS SUPPLEMENT
(to the Short Form Base Shelf Prospectus dated August 30,
2021)
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NEW ISSUE
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December 19, 2022
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ORGANIGRAM HOLDINGS INC.
16,943,650 Common Shares
This prospectus supplement (the
"Prospectus Supplement"), together with the short form base
shelf prospectus to which it relates dated August 30, 2021, as
amended or supplemented (the "Prospectus"), qualifies the
distribution of: (i) up to 16,943,650 common shares (the "Common
Shares") of Organigram Holdings Inc. (the "Corporation")
issuable from time to time upon the exercise of up to 16,943,650
Warrants (as defined herein) issued by us on November 10, 2020
pursuant to the Unit Offering (as defined herein); and (ii) such
indeterminate number of additional common shares that may be
issuable by reason of the adjustment provisions contained in the
Warrant Indenture (as defined herein). The Common Shares issuable
upon exercise of Warrants are referred to herein as "Warrant
Shares".
The Corporation has filed the
Prospectus with the securities commissions in all of the provinces
and territories of Canada, and a registration statement on Form
F-10 (File No. 333-257363) (the "Registration Statement")
with the United States Securities and Exchange Commission (the
"SEC") under the United States Securities Act of 1933, as
amended (the "U.S. Securities Act"). The Prospectus
forms part of the Registration Statement, which was principally
filed with the SEC on June 24, 2021 and amended August 31,
2021. Previously, on November 10, 2020, the Corporation filed
a prospectus supplement with the securities commissions in all of
the provinces and territories of Canada pursuant to a short form
base shelf prospectus dated November 22, 2019 (the "2019
Prospectus"), and a registration statement on Form F-10 (File
No. 333-234564) (the "2019 Registration Statement") filed
with the SEC under the U.S. Securities Act, relating to the
offering (the "Unit Offering") by the Corporation of up to
32,500,000 units of the Corporation (collectively, the
"Units", and each, a "Unit") at a price of $1.85 per
Unit. Each Unit consisted of one Common Share and one-half of one
Common Share purchase warrant (each whole warrant, a
"Warrant"). Pursuant to the warrant indenture entered into
between the Corporation and TSX Trust Company (the "Warrant
Agent") on November 10, 2020 in connection with the Unit
Offering (the "Warrant Indenture") each Warrant entitles the
holder thereof to acquire one Warrant Share at an exercise price of
$2.50 per Warrant Share, until 5:00 p.m. (Eastern Time) on November
12, 2023.
The exercise price of the Warrants
was determined by negotiation between the Corporation and the
underwriters for the Unit Offering. See "Plan of
Distribution".
The Corporation's issued and
outstanding Common Shares are listed on the Toronto Stock Exchange
(the "TSX") and the Nasdaq Global Select Market (the
"NASDAQ") under the symbol "OGI". On December 16,
2022, the closing prices of the Common Shares on such exchanges
were $1.24 and US$0.89, respectively.
The Corporation has received
approval from the TSX and the NASDAQ to list the Warrant Shares on
the TSX and NASDAQ, as applicable.
Any investment in the Warrant
Shares involves significant risks that should be carefully
considered by prospective investors. The risks outlined in this
Prospectus Supplement, the Prospectus, and in the documents
incorporated by reference herein and therein, should be carefully
reviewed and considered by prospective investors. See the "Risk
Factors" section of this Prospectus Supplement and the
Prospectus.
The Corporation is permitted,
under a multi-jurisdictional disclosure system (the "MJDS") adopted
by the securities regulatory authorities in Canada and the United
States, to prepare the Prospectus and this Prospectus Supplement in
accordance with Canadian disclosure requirements, which are
different from those of the United States. Financial statements
incorporated by reference herein have been prepared in accordance
with International Financial Reporting Standards ("IFRS") as issued
by the International Accounting Standards Board ("IASB") and may
not be comparable to financial statements of United States
companies. The Corporation's financial statements are subject to
audit in accordance with the standards of the Public Corporation
Accounting Oversight Board (United States) ("PCAOB") and its
auditor is subject to both Canadian auditor independence standards
and the auditor independence standards of the PCAOB and the
SEC.
The enforcement by investors of
civil liabilities under United States federal securities laws may
be affected adversely because the Corporation is a corporation
existing under the laws of Canada. The Corporation exists under the
laws of Canada, and all of its executive offices, administrative
activities and assets are located outside the United States. In
addition, all of the directors and officers of the Corporation are
residents of jurisdictions other than the United States and all or
a substantial portion of the assets of those persons are or may be
located outside the United States. See the
"Enforceability of Civil Liabilities by
U.S. Investors" section of this Prospectus
Supplement.
THE WARRANT SHARES ISSUABLE UPON
EXERCISE OF THE WARRANTS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SEC OR ANY STATE OR CANADIAN SECURITIES COMMISSION OR
REGULATORY AUTHORITY NOR HAS THE SEC OR ANY STATE OR CANADIAN
SECURITIES COMMISSION OR REGULATORY AUTHORITY PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENCE.
You should be aware that the
acquisition of the Warrant Shares described herein may have tax
consequences both in the United States and in Canada. Such
consequences may not be described fully in this Prospectus
Supplement or the Prospectus. Investors should read the tax
discussion in this Prospectus Supplement and consult their own tax
advisors with respect to their particular circumstances. See
"Certain Canadian Federal Income Tax
Considerations", "Certain U.S. Federal Income
Tax Considerations" and "Risk
Factors".
The Corporation is continued under
the Canada Business Corporations Act and its head office is
located at 1250-333 Bay Street, Toronto, ON, Canada M5H 2R2 and its
registered office is located at 35 English Drive, Moncton, NB,
Canada E1E 3X3.
TABLE OF CONTENTS
(i)
IMPORTANT INFORMATION ABOUT THE
PROSPECTUS
AND THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The
first part is this Prospectus Supplement, which describes the
specific terms of the Warrant Shares and also adds to and updates
certain information contained in the Prospectus and the documents
incorporated by reference herein and therein. The second part is
the Prospectus, which gives more general information, some of which
may not apply to the Warrant Shares. This Prospectus Supplement is
deemed to be incorporated by reference in the Prospectus solely for
the purpose of the offering of Warrant Shares issuable from time to
time on the exercise of the Warrants.
If the description of the
Warrant Shares varies between this Prospectus Supplement and the
Prospectus, you should rely on the information in this Prospectus
Supplement.
No representation is made in
respect of information that is not included in, or specifically
incorporated by reference into, the Prospectus. We have not
authorized anyone to provide you with different or additional
information. The information contained in this Prospectus
Supplement, the Prospectus and the documents incorporated by
reference herein and therein is accurate only as of the respective
dates of those documents, and you should not assume
otherwise.
The Prospectus also forms part of
the Registration Statement that we filed with the SEC under the
U.S. Securities Act utilizing the MJDS. The Registration Statement
was declared effective by the SEC under the U.S. Securities Act on
November 17, 2021 (SEC File No. 333-357363). This Prospectus
Supplement is being filed by us with the SEC pursuant to General
Instruction II.L of Form F-10. The Registration Statement
incorporates the Prospectus and the Prospectus Supplement with
certain modifications and deletions permitted by Form F-10.
This Prospectus Supplement does not qualify the distribution of the
Warrant Shares in any province or territory of Canada.
Unless the context otherwise
permits, indicates or requires, all references in this Prospectus
Supplement to the "Corporation", "we", "our", "us" and similar
expressions are references to Organigram Holdings Inc. and the
business carried on by it.
NOTE TO U.S. READERS REGARDING
DIFFERENCES BETWEEN UNITED STATES AND
CANADIAN REPORTING PRACTICES
The Corporation prepares its
financial statements in accordance with IFRS, as issued by the
IASB, which differ from U.S. generally accepted accounting
principles ("U.S. GAAP"). Accordingly, the Corporation's
financial statements incorporated by references in the Prospectus
Supplement, and in the documents incorporated by reference in this
Prospectus Supplement, may not be comparable to financial
statements of United States companies prepared in accordance with
U.S. GAAP.
CURRENCY PRESENTATION AND
EXCHANGE RATE INFORMATION
Unless otherwise noted herein and
in the documents incorporated by reference, all dollar amounts
refer to lawful currency of Canada. All references to "US$" or
"U.S. dollars" are to the currency of the United States.
The following table sets forth, for
the periods indicated, the high, low, average and period-end
indicative rates of exchange for one U.S. dollar expressed in
Canadian dollars, each based on the daily average rate of exchange
published by the Bank of Canada for conversion of U.S. dollars into
Canadian dollars.
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Fiscal Year Ended
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August 31, 2022
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August 31, 2021
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Low
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1.2329
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1.2040
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High
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1.3138
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1.3396
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Average
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1.2720
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1.2688
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End
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1.3111
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1.2617
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On December 16, 2022, the daily
average rate of exchange posted by the Bank of Canada for
conversion of U.S. dollars into Canadian dollars was US$1.00 =
$1.3687. We make no representation that U.S. dollars could be
converted into Canadian dollars at that rate or any other rate.
FORWARD-LOOKING
STATEMENTS
This Prospectus Supplement and the
Prospectus, including the documents incorporated by reference
herein and therein, contain "forward-looking statements" or
"forward-looking information" within the meaning of applicable
securities legislation (collectively referred to herein as
"forward-looking information" or "forward-looking
statements") which are based upon the Corporation's current
internal expectations, estimates, projections, assumptions and
beliefs. All statements other than statements of historical fact
contained in this Prospectus Supplement, the Prospectus, or in the
documents incorporated by reference herein and therein, are
forward-looking statements, including, without limitation, the
Corporation's statements regarding the impact of COVID-19 (as
defined herein), the Corporation's business and the environment in
which it operates, the Corporation's development and launch of new
products, the Corporation's expectations regarding its production
capacity and facility size, the Corporation's expectations
regarding demand for cannabis and related products. In certain
cases, forward-looking statements can be identified by the use of
words such as "plans", "expects", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates", "projects",
"believes", "pro forma" or variations of such words and phrases or
statements that certain actions, events or results "may", "could",
"would", "might" or "will", "occur" or "be achieved" and similar
words or the negative thereof. Although management of the
Corporation believes that the expectations represented in such
forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct.
The forward-looking statements in
this Prospectus Supplement and the Prospectus, including the
documents incorporated by reference herein and therein, are based
on certain assumptions, including construction, production,
cultivation and distribution activities will proceed as planned and
regulatory conditions will advance in the manner expected by
management, that demand for cannabis and related products will
change in the manner expected by management, in each case after
taking into account any impacts related to COVID-19 that are
currently known or predicted by management based on the limited
information available and the fluidity and uncertainty of the
crisis. They are not guarantees of future performance and involve
risks and uncertainties that are difficult to control or predict. A
number of factors could cause actual results to differ materially
from the results discussed in the forward-looking statements,
including, but not limited to, the factors discussed under the
heading "Risk Factors" in this Prospectus Supplement, the
Annual Information Form (as defined below) and the Annual MD&A
(as defined below) and the other factors referenced in the Annual
MD&A, including those relating to general economic conditions
and global events including COVID-19; potential supply chain and
distribution disruptions; product development, facility and
technological risks; changes to government laws, regulations or
policy, including environmental or tax, or the enforcement thereof;
agricultural risks; and the Corporation's ability to maintain any
required licenses or certifications. The Annual Information Form
has also been filed with the SEC through the Electronic Data
Gathering, Analysis, and Retrieval system ("EDGAR") as an
exhibit to the Corporation's annual report on Form 40-F, and may be
accessed on the SEC's website at www.sec.gov.
There can be no assurance that
forward-looking statements will prove to be accurate as actual
outcomes and results may differ materially from those expressed in
these forward-looking statements. Readers, therefore, should not
place undue reliance on any such forward-looking statements.
Further, these forward-looking statements are made as of the date
of this Prospectus Supplement and, except as expressly required by
applicable law, the Corporation assumes no obligation to publicly
update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise.
ADDITIONAL INFORMATION
This Prospectus Supplement and the
Prospectus, including the documents incorporated by reference into
this Prospectus Supplement and the Prospectus, form part of the
Registration Statement that we have filed with the SEC. This
Prospectus Supplement and the Prospectus, together do not contain
all of the information contained in the Registration Statement,
certain items of which have been omitted or are contained in the
exhibits to the Registration Statement as permitted by the rules
and regulations of the SEC. See "Documents Filed as Part of the
Registration Statement". Statements included or incorporated by
reference in this Prospectus Supplement about the contents of any
contract, agreement or other documents referred to are not
necessarily complete, and in each instance, you should refer to the
exhibits for a complete description of the matter involved. Each
such statement is qualified in its entirety by such reference.
The Corporation's Common Shares are
registered under Section 12(b) of the United States Securities
Exchange Act of 1934, as amended (the "U.S. Exchange Act"),
and accordingly, we are subject to informational requirements of
the U.S. Exchange Act and applicable Canadian requirements. In
accordance with these informational requirements, we file reports
and other information with the SEC and with securities regulatory
authorities in Canada. Under the MJDS adopted by the United States
and Canada, documents and other information that we file with the
SEC may be prepared in accordance with the disclosure requirements
of Canada, which are different from those of the United States. As
a foreign private issuer, we are exempt from the rules under the
U.S. Exchange Act prescribing the furnishing and content of proxy
statements, and our officers, directors and principal shareholders
are exempt from the reporting and short-swing profit recovery
provisions contained in Section 16 of the U.S. Exchange Act.
Reports and other information filed by us with, or furnished to,
the SEC may be accessed on the SEC's website at www.sec.gov. You
may read and download any public document that we have filed with
the securities commission or similar regulatory authority in each
of the provinces and territories of Canada on the Canadian
Securities Administrators' System for Electronic Document Analysis
and Retrieval, or SEDAR, at www.sedar.com.
ENFORCEABILITY OF CIVIL
LIABILITIES BY U.S. INVESTORS
The Corporation exists under the
laws of Canada, and all of its executive offices, administrative
activities and assets are located outside the United States. In
addition, with the exception of Marni Wieshofer, all of the
directors and officers of the Corporation are residents of
jurisdictions other than the United States and all or a substantial
portion of the assets of those persons are or may be located
outside the United States.
As a result, investors who reside
in the United States may have difficulty serving legal process in
the United States upon the Corporation or its directors or
officers, as applicable, or enforcing judgments obtained in United
States courts against any of them or the assets of any of them
located outside the United States, or enforcing against them in the
appropriate Canadian court judgments obtained in United States
courts, including, but not limited to, judgments predicated upon
the civil liability provisions of the federal securities laws of
the United States, or bringing an original action in the
appropriate Canadian courts to enforce liabilities against the
Corporation or any of its directors or officers, as applicable,
based upon United States federal securities laws.
In the United States, the
Corporation has filed with the SEC, concurrently with the filing of
its Registration Statement, an appointment of agent for service of
process on Form F-X. Under such Form F-X, the Corporation has
appointed Corporation Service Company of 1090 Vermont Avenue N.W.,
Washington, DC 20005, U.S.A., as its agent for service of process
in the United States in connection with any investigation or
administrative proceeding conducted by the SEC, and any civil suit
or action brought against the Corporation in a United States court
arising out of or related to or concerning the Warrants and/or
Warrant Shares.
DOCUMENTS INCORPORATED BY
REFERENCE
This Prospectus Supplement is
deemed to be incorporated by reference in the Prospectus solely for
the purpose of the offering of Warrant Shares issuable from time to
time on the exercise of the Warrants.
Information has been
incorporated by reference in the Prospectus from documents filed
with securities commissions or similar regulatory authorities in
each of the provinces and territories of Canada, which have also
been filed with, or furnished to, the SEC. Copies of these
documents may be obtained on request without charge from the
Corporate Secretary of the Corporation at 1250-333 Bay Street,
Toronto, ON, Canada M5H 2R2, Attention: Corporate Secretary
(telephone (855) 961-9420), and are also available electronically
under the Corporation's SEDAR profile at www.sedar.com. Documents
filed with, or furnished to, the SEC are available through EDGAR at
www.sec.gov.
Except to the extent that their
contents are modified or superseded by a statement contained in the
Prospectus or in any other subsequently filed document that is also
incorporated by reference in the Prospectus, the following
documents of the Corporation filed with the securities commissions
or similar regulatory authorities in each of the provinces and
territories of Canada are specifically incorporated by reference
into, and form an integral part of, the Prospectus:
(a) the
annual information form of the Corporation for the year ended
August 31, 2022, dated November 24, 2022 (the "Annual
Information Form");
(b) the
audited consolidated financial statements of the Corporation as of
and for the years ended August 31, 2022 and 2021, and related notes
thereto, (the"Annual Financial Statements"), together with
the related management's report on internal control over financial
reporting as of August 31, 2022, and the reports of the independent
registered public accounting firm thereon;
(c) the
management's discussion and analysis of financial condition and
results of operations of the Corporation for the three months and
year ended August 31, 2022 (the "Annual MD&A"); and
(d) the
management information circular of the Corporation dated January
18, 2022 regarding the annual and special meeting of shareholders
of the Corporation held on February 23, 2022;
Any documents of the type described
in Item 11.1 of Form 44-101F1 - Short Form Prospectus
Distributions subsequently filed by us with the securities
commissions or regulatory authorities in Canada after the date of
this Prospectus Supplement, and prior to the date on which the
offering of Warrant Shares issuable from time to time on the
exercise of the Warrants under this Prospectus Supplement ends,
shall be deemed to be incorporated by reference into this
Prospectus Supplement and the Prospectus.
Upon a new annual information form
and annual consolidated financial statements being filed by the
Corporation with the applicable Canadian securities commissions or
similar regulatory authorities in Canada during the period that
this Prospectus Supplement is effective, the previous annual
information form, the previous annual consolidated financial
statements and all interim consolidated financial statements and in
each case the accompanying management's discussion and analysis,
and material change reports, filed prior to the commencement of the
financial year of the Corporation in which the new annual
information form is filed shall be deemed to no longer be
incorporated into this Prospectus Supplement for purpose of future
offering of Warrant Shares issuable from time to time on the
exercise of the Warrants under this Prospectus Supplement. Upon
interim consolidated financial statements and the accompanying
management's discussion and analysis being filed by the Corporation
with the applicable Canadian securities commissions or similar
regulatory authorities during the period that this Prospectus
Supplement is effective, all interim consolidated financial
statements and the accompanying management's discussion and
analysis filed prior to such new interim consolidated financial
statements and management's discussion and analysis shall be deemed
to no longer be incorporated into this Prospectus Supplement for
purposes of future offering of Warrant Shares issuable from time to
time on the exercise of the Warrants under this Prospectus
Supplement. In addition, upon a new management information circular
for an annual meeting of shareholders being filed by the
Corporation with the applicable Canadian securities commissions or
similar regulatory authorities during the period that this
Prospectus Supplement is effective, the previous management
information circular filed in respect of the prior annual meeting
of shareholders shall no longer be deemed to be incorporated into
this Prospectus Supplement for purposes of future offering of
Warrant Shares issuable from time to time on the exercise of the
Warrants under this Prospectus Supplement.
In addition, to the extent that
any document or information incorporated by reference into this
Prospectus Supplement and the Prospectus is included in any report
on Form 6-K, Form 40-F or Form 20-F (or any respective successor
form) that is filed with or furnished to the SEC after the date of
this Prospectus Supplement, such document or information shall be
deemed to be incorporated by reference as an exhibit to the
Registration Statement of which this Prospectus Supplement forms a
part. In addition, the Corporation may incorporate by reference
into this Prospectus Supplement, or the Registration Statement of
which it forms a part, other information from documents that the
Corporation will file with or furnish to the SEC pursuant to
Section 13(a) or 15(d) of the U.S. Exchange Act, if and to the
extent expressly provided therein.
Notwithstanding anything herein
to the contrary, any statement contained in this Prospectus
Supplement or the Prospectus or in a document incorporated or
deemed to be incorporated by reference herein or therein shall be
deemed to be modified or superseded, for the purposes of this
Prospectus Supplement or the Prospectus, to the extent that a
statement contained herein or in any other subsequently filed
document which also is, or is deemed to be, incorporated by
reference herein or in the Prospectus modifies or supersedes such
statement. The modifying or superseding statement need not state
that it has modified or superseded a prior statement or include any
other information set forth in the document or statement which it
modifies or supersedes. The making of such a modifying or
superseding statement shall not be deemed an admission for any
purposes that the modified or superseded statement, when made,
constituted a misrepresentation, an untrue statement of a material
fact or an omission to state a material fact that is required to be
stated or that is necessary to make a statement not misleading in
light of the circumstances in which it was made.
THE CORPORATION
The Corporation was incorporated
under the Business Corporations Act (British Columbia) (the
"BCBCA") on July 5, 2010 as Inform Resources Corp. and
changed its name to Inform Exploration Corp. ("Inform") on
February 16, 2011. On November 21, 2011, Inform completed its
initial public offering and its common shares commenced trading on
the TSX-Venture Exchange (the "TSX-V") on November 24, 2011.
At that time, Inform was engaged in the acquisition, exploration
and development of natural resource properties. Inform subsequently
ceased all resource exploration activity.
In August 2014, pursuant to a
reverse takeover transaction in accordance with Policy 5.2 of the
TSX-V, Inform acquired all of the issued and outstanding shares of
Organigram Inc. (the "RTO Transaction"). On or about the
time of closing the RTO Transaction, Inform changed its name to
Organigram Holdings Inc. On April 6, 2016, Organigram Holdings Inc.
was continued from the BCBCA to the Canada Business Corporations
Act. On February 25, 2020, the Corporation amended its articles
to, among other things, clarify the rights, privileges,
restrictions and conditions attaching to the Common Shares.
USE OF PROCEEDS
From time to time, when the
Warrants are exercised, the Corporation may receive proceeds equal
to the aggregate exercise price of such Warrants. Assuming that all
of the Warrants are exercised prior to their expiry time, and that
no adjustment based on the anti-dilution provisions contained in
the Warrant Indenture have taken place, the gross proceeds to the
Corporation from the exercise of the Warrants will be
$42,359,125.
We intend to use the proceeds from
the exercise of the Warrants, if any, for working capital and
general corporate purposes.
The ultimate allocation of the net
proceeds from exercise of the Warrants may vary depending on future
developments in the Corporation's business operations or unforeseen
events, including those listed under the "Risk Factors"
section of this Prospectus Supplement. For example, the
Corporation had negative operating cash flow for the year ended
August 31, 2022. To the extent that the Corporation has
negative cash flows in future periods, the Corporation may use a
greater portion of its general working capital to fund such
negative cash flow than it would use if it had positive cash flow.
Investors are cautioned that, notwithstanding the Corporation's
current intentions regarding the use of the net proceeds, there may
be circumstances where a reallocation of the net proceeds may be
advisable for reasons that management believes, in its discretion,
are in the Corporation's best interests.
DESCRIPTION OF THE
SECURITIES
Authorized Share Capital
The authorized capital of the
Corporation consists of an unlimited number of Common Shares and an
unlimited number of preferred shares (the "Preferred
Shares"). As at the close of business on December 16, 2022,
there were 313,856,912 Common Shares issued and outstanding; there
are no Preferred Shares issued and outstanding.
Common Shares
The holders of the Common Shares
are entitled to one vote per share at all meetings of the
shareholders of the Corporation either in person or by proxy. The
holders of Common Shares are also entitled to dividends, if and
when declared by the directors of the Corporation and the
distribution of the residual assets of the Corporation in the event
of a liquidation, dissolution or winding up of the Corporation.
Dividends
As of the date of this Prospectus
Supplement, the Corporation has not declared dividends and has no
current intention to declare dividends on its Common Shares in the
foreseeable future. Any decision to pay dividends on its Common
Shares in the future will be at the discretion of the Corporation's
board of directors ("Board") and will depend on, among other
things, the Corporation's results of operations, current and
anticipated cash requirements and surplus, financial condition, any
future contractual restrictions and financing agreement covenants,
solvency tests imposed by corporate law and other factors that the
Board may deem relevant.
Warrants
The Warrants are governed by the
Warrant Indenture entered into on November 12, 2020 between the
Corporation and the Warrant Agent. The Corporation appointed the
principal transfer office of the Warrant Agent in Toronto, Ontario
as the location at which the Warrants may be surrendered for
exercise, transfer or exchange. A register of holders is maintained
at the primary offices of the warrant agent in Toronto, Ontario.
Under the Warrant Indenture, the Corporation may, subject to
applicable law, purchase by private contract or otherwise, any of
the Warrants then outstanding, and any Warrants so purchased will
be cancelled.
Each Warrant is transferable and
entitles the holder thereof to acquire one Warrant Share at an
exercise price of $2.50 per Warrant Share, until 5:00 p.m. (Eastern
time) on November 12, 2023, subject to adjustment in certain
customary events, after which time the Warrants will expire and
become null and void. The Warrant Indenture provides that, subject
to compliance with applicable securities legislation and approval
of applicable regulatory authorities, the Corporation is entitled
to purchase in the market, by private contract or otherwise, all or
any of the Warrants then outstanding, and any Warrants so purchased
will be cancelled.
The Warrant Indenture provides for
adjustment in the number of Warrant Shares issuable upon the
exercise of the Warrants and/or the exercise price per Warrant
Share upon the occurrence of certain events, including:
(a) the
issuance of Common Shares or securities exchangeable for or
convertible into Common Shares to all or substantially all of the
holders of the Common Shares by way of a stock dividend or other
distribution (other than a distribution of Warrant Shares upon the
exercise of any Warrants);
(b) the
subdivision, redivision or change of the Common Shares into a
greater number of Common Shares;
(c) the
consolidation, reduction or combination of the Common Shares into a
lesser number of Common Shares;
(d) the
issuance to all or substantially all of the holders of the Common
Shares of rights, options or warrants under which such holders are
entitled, during a period expiring not more than 45 days after the
record date for such issuance, to subscribe for or purchase Common
Shares, or securities exchangeable for or convertible into Common
Shares; and
(e) the
issuance or distribution to all or substantially all of the holders
of the Common Shares of (i) securities of any class, whether of the
Corporation or any other trust (other than Common Shares), (ii)
rights, options or warrants to subscribe for or purchase Common
Shares (or other securities convertible into or exchangeable for
Common Shares), other than pursuant to a "Rights Offering" (as
defined in the Warrant Indenture); (iii) evidences of its
indebtedness or (iv) any property or other assets.
The Warrant Indenture also provides
for adjustment in the class and/or number of securities issuable
upon the exercise of the Warrants and/or exercise price per
security in the event of the following additional events:
reclassifications
of the Common Shares or a capital reorganization of the
Corporation;
(f) consolidations,
amalgamations, arrangements or mergers of the Corporation with or
into any other corporation or other entity; or
(g) the
transfer of the undertaking or assets of the Corporation as an
entirety or substantially as an entirety to another corporation or
other entity.
No adjustment in the exercise price
or the number of Warrant Shares issuable upon the exercise of the
Warrants is required to be made unless the cumulative effect of
such adjustment or adjustments would result in a change of at least
1% in the exercise price or a change in the number of Warrant
Shares issuable upon exercise by at least one one-hundredth of a
Warrant Share, as the case may be. Furthermore, no adjustment will
be made in the right to acquire Warrant Shares if an issue of
Common Shares of the Corporation is being made in connection with a
share incentive plan, restricted share plan or share purchase plan
for the benefit of directors, officers, employees, consultants or
other service providers, or the satisfaction of existing
instruments issued as of the date of the Warrant Indenture.
The Corporation has covenanted in
the Warrant Indenture that, during the period in which the Warrants
are exercisable, it will give notice to the Warrant Agent and to
the holders of the Warrants of certain stated events, including
events that would result in an adjustment to the exercise price for
the Warrants or the number of Warrant Shares issuable upon exercise
of the Warrants, at least 14 days prior to the record date of such
event, if any.
No fractional Warrant Shares are
issuable upon the exercise of any Warrants and no cash or other
consideration will be paid in lieu of fractional Warrant Shares.
Holders of Warrants do not have any voting or pre-emptive rights or
any other rights which a holder of Common Shares would have.
The Corporation may provide certain
buy-in rights to a holder if it fails to cause the Warrant Agent to
deliver the Warrant Shares by three trading days after the delivery
to the Corporation of the notice of exercise and the aggregate
exercise price (or notice of cashless exercise). The buy-in rights
apply if after the trading day after the date of such delivery by
the holder, the holder purchases (in an open market transaction or
otherwise) Common Shares to deliver in satisfaction of a sale by
the holder of the Warrant Shares that the holder anticipated
receiving from the Corporation upon exercise of the Warrant. In
this event, the Corporation will: (i) pay in cash to the holder the
amount equal to the excess (if any) of the buy-in price over the
product of (A) such number of Warrant Shares, times (B) the price
at which the sell order giving rise to holder's purchase obligation
was executed; and (ii) at the election of the holder, either (A)
reinstate the portion of the Warrant as to such number of Warrant
Shares, or (B) deliver to the holder a certificate or certificates
representing such number of Warrant Shares that would have been
issued to the holder had the Corporation complied with its delivery
obligations under the Warrant Indenture.
The Warrant Indenture includes
certain beneficial ownership limitations under which Warrants are
not exercisable to the extent that, after giving effect to the
issuance of the Warrant Shares issuable upon such exercise of the
Warrants, the holder, together with its affiliates and other
persons acting as a group with the holder or any of its affiliates,
would beneficially own in excess of 4.99% of the number of Common
Shares outstanding immediately after giving effect to such
issuance. Such beneficial ownership limitation may be increased or
decreased by the holder upon notice to the Corporation, to a
maximum of 9.99%. Except as provided in the Warrant Indenture,
beneficial ownership will be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. To the extent the beneficial ownership limitations
apply, the determination of whether a Warrant is exercisable and of
which portion of a Warrant is exercisable shall be in the sole
discretion and at the sole responsibility of the holder, and the
submission of an exercise notice in respect of any Warrants shall
be deemed to be the holder's determination of whether the Warrants
are exercisable, and neither the warrant agent nor the Corporation
will have any obligation to verify or confirm the accuracy of such
determination.
The Warrant Indenture provides that
the Corporation will use its reasonable best efforts to maintain
the Registration Statement or another registration statement
relating to the Warrant Shares effective until the earlier of the
expiration date of the Warrants and the date on which no Warrants
remain outstanding (provided, however, that nothing shall prevent
the Corporation's amalgamation, arrangement, merger or sale,
including any take-over bid, and any associated delisting or
deregistration or ceasing to be a reporting issuer, provided that,
so long as the Warrants are still outstanding and represent a right
to acquire securities of the acquiring Corporation, the acquiring
Corporation shall assume the Corporation's obligations under the
Warrant Indenture). If no such registration statement is effective,
no person holding Warrants will be permitted to exercise Warrants,
unless an exemption or a safe harbor from the registration
requirements of the U.S. Securities Act and applicable state
securities laws is available. During any such period, any person
holding Warrants may give notice of their desire to exercise the
Warrants, at which time the Corporation will permit the cashless
exercise of the Warrants and issue such number of Warrant Shares
calculated pursuant to the provisions of the Warrant Indenture,
provided that such Warrant Shares shall not be subject to any
transfer restrictions in the United States or Canada. If no such
registration statement is effective, the Corporation will notify
the holders of the Warrants in accordance with the provisions of
the Warrant Indenture
The Warrant Indenture provides
that, from time to time, the Corporation may amend or supplement
the Warrant Indenture for certain purposes, without the consent of
the holders of the Warrants, including curing defects or
inconsistencies or making any change that does not prejudice the
rights of any holder. Any amendment or supplement to the Warrant
Indenture that would prejudice the interests of the holders of
Warrants may only be made by "extraordinary resolution", which is
defined in the Warrant Indenture as a resolution either: (i) passed
at a meeting of the holders of Warrants at which there are holders
of Warrants present in person or represented by proxy representing
at least 20% of the aggregate number of the then outstanding
Warrants by the affirmative vote of the holders of Warrants
representing not less than 662/3% of the aggregate
number of Warrants represented at the meeting and voted on the poll
upon such resolution; or (ii) adopted by an instrument in writing
signed by the holders of Warrants representing not less than 66
2/3% of the aggregate number of all the then outstanding
Warrants.
The foregoing summary of certain
provisions of the Warrant Indenture does not purport to be complete
and is qualified in its entirety by reference to the provisions of
the Warrant Indenture in the form to be agreed upon by the parties.
Reference should be made to the Warrant Indenture for the full text
of attributes of the Warrants which has been filed by the
Corporation under its corporate profile on SEDAR and EDGAR.
PLAN OF DISTRIBUTION
This Prospectus Supplement relates
to the qualification for distribution of: (i) up to 16,943,650
Warrant Shares issuable from time to time upon exercise of up to
16,943,650 Warrants issued by us on November 12, 2020 pursuant to
the Unit Offering; and (ii) such indeterminate number of additional
Warrant Shares that may be issuable by reason of the anti-dilution
provisions contained in the Warrant Indenture. See "Description
of Securities - Warrants" for additional information on the
terms of the Warrants.
On November 10, 2020, the
Corporation filed a prospectus supplement with the securities
commissions in all of the provinces and territories of Canada,
except Québec, to the 2019 Prospectus, and filed the 2019
Registration Statement with the SEC relating to Unit Offering. Each
Unit consisted of one Common Share, and one-half of a Warrant at a
price of $1.85 per Unit. Each Warrant entitles the holder to
acquire one Warrant Share at an exercise price of $2.50 per Warrant
Share, until 5:00 p.m. (Eastern Time) on November 12, 2023. The
exercise price of the Warrants was determined by negotiation
between the Corporation and the underwriters for the Unit
Offering.
The 2019 Prospectus has expired and
the 2019 Registration Statement has ceased to be effective.
Accordingly, this Prospectus Supplement supplements the Prospectus
and Registration Statement, and registers the offering of the
securities to which it relates under the U.S. Securities Act in
accordance with MJDS. This Prospectus Supplement does not qualify
the distribution of the Warrant Shares in any province or territory
of Canada.
Holders of Warrants resident in the
United States who acquire Warrant Shares pursuant to the exercise
of Warrants in accordance with their terms and under the Prospectus
and this Prospectus Supplement may have a right of action against
us for any misrepresentation in the Prospectus and this Prospectus
Supplement. However, the existence and enforceability of such a
right of action is not without doubt.
The Warrant Shares to which this
Prospectus Supplement relates will be sold directly by us to
holders of Warrants, as the case may be, on the exercise of such
Warrants. No underwriters, dealers or agents will be involved in
these sales. No underwriter has been involved in the preparation
of, or has performed any review of, this Prospectus Supplement.
It was a condition of closing of
the Unit Offering that the shelf registration statement remain
effective with the SEC and that we file with the SEC a prospectus
supplement registering the offering of the Warrant Shares issuable
from time to time on the exercise of the Warrants. No U.S. Person,
person within the United States or person holding Warrants for the
account or benefit of a U.S. Person or person within the United
States may exercise the Warrants during any period of time when a
registration statement covering such Warrant Shares is not
effective or an exemption from such registration is not otherwise
available. If a registration statement under the U.S. Securities
Act is not effective, the Warrants may be exercised on a net
cashless basis. See "See "Description of Securities -
Warrants" for additional information of the terms of the
Warrants.
PRIOR SALES
The following table summarizes our
issuances of Common Shares and securities convertible into Common
Shares during the 12 months prior to the date of this Prospectus
Supplement:
|
Date of Issuance |
Security Issued |
Reason for Issuance |
Number of
Securities
Issued |
Price per
Security
($) |
|
December 21, 2021 |
Common
Shares |
Consideration for the acquisition of Laurentian Organic Inc. |
10,896,422 |
2.53 |
| January
19, 2022 |
Common
Shares |
Settlement of restricted share units |
25,143 |
4.29 |
| January
19, 2022 |
Common
Shares |
Settlement of restricted share units |
13,837 |
2.15 |
| January
19, 2022 |
Common
Shares |
Settlement of restricted share units |
50,000 |
4.75 |
| January
19, 2022 |
Common
Shares |
Settlement of restricted share units |
63,158 |
4.75 |
| January
19, 2022 |
Common
Shares |
Settlement of restricted share units |
45,732 |
6.59 |
|
February 24, 2022 |
Common
Shares |
Settlement of restricted share units |
4,051 |
4.29 |
|
February 24, 2022 |
Common
Shares |
Settlement of restricted share units |
3,309 |
2.15 |
|
February 24, 2022 |
Common
Shares |
Settlement of performance share units |
3,039 |
4.29 |
|
February 24, 2022 |
Common
Shares |
Settlement of performance share units |
4,181 |
2.15 |
|
February 24, 2022 |
Common
Shares |
Exercise of BT DE Investments Inc. top-up rights |
2,659,716 |
2.39 |
| March
30, 2022 |
Common
Shares |
Exercise of stock options |
906 |
2.13 |
| April
14, 2022 |
Common
Shares |
Settlement of performance share units |
1,133 |
4.29 |
| April
14, 2022 |
Common
Shares |
Settlement of performance share units |
6,109 |
2.15 |
| April
14, 2022 |
Common
Shares |
Settlement of restricted share units |
1,511 |
4.29 |
| April
14, 2022 |
Common
Shares |
Settlement of restricted share units |
4,477 |
2.15 |
| April
18, 2022 |
Common
Shares |
Settlement of restricted share units |
2,850 |
2.15 |
| April
18, 2022 |
Common
Shares |
Settlement of performance share units |
966 |
2.15 |
| May 24,
2022 |
Restricted Share Units |
Grant
under 2020 Incentive Plan |
18,430 |
1.61 |
| May 24,
2022 |
Performance Share Units |
Grant
under 2020 Incentive Plan |
18,430 |
1.61 |
| May 24,
2022 |
Options |
Grant
under 2020 Incentive Plan |
280,000 |
1.61 |
| July
21, 2022 |
Restricted Share Units |
Grant
under 2020 Incentive Plan |
1,035,000 |
1.40 |
| July
21, 2022 |
Options |
Grant
under 2020 Incentive Plan |
4,677,000 |
1.40 |
| July
22, 2022 |
Common
Shares |
Settlement of restricted share units |
771 |
2.15 |
| July
22, 2022 |
Common
Shares |
Settlement of performance share units |
1,735 |
2.15 |
| August
4, 2022 |
Common
Shares |
Settlement of restricted share units |
1,345 |
4.29 |
| August
4, 2022 |
Common
Shares |
Settlement of restricted share units |
726 |
2.15 |
| August
4, 2022 |
Common
Shares |
Settlement of restricted share units |
1,829 |
6.59 |
| August
4, 2022 |
Common
Shares |
Settlement of performance share units |
1,009 |
4.29 |
| August
4, 2022 |
Common
Shares |
Settlement of performance share units |
1,633 |
2.15 |
|
Date of Issuance |
Security Issued |
Reason for Issuance |
Number of
Securities
Issued |
Price per
Security
($) |
|
August 15, 2022
|
Common Shares
|
Settlement of restricted share units
|
3,771
|
4.29
|
|
August 15, 2022
|
Common Shares
|
Settlement of restricted share units
|
25,000
|
4.75
|
|
August 15, 2022
|
Common Shares
|
Settlement of restricted share units
|
7,088
|
6.59
|
|
August 15, 2022
|
Common Shares
|
Settlement of performance share units
|
2,829
|
4.29
|
|
August 15, 2022
|
Common Shares
|
Exercise of stock options
|
20,000
|
0.30
|
|
August 15, 2022
|
Common Shares
|
Exercise of stock options
|
40,000
|
0.58
|
|
September 29, 2022
|
Restricted Share Units
|
Grant under 2020 Incentive Plan
|
1,477,313
|
1.23
|
|
September 29, 2022
|
Performance Share Units
|
Grant under 2020 Incentive Plan
|
838,228
|
1.23
|
|
September 29, 2022
|
Options
|
Grant under 2020 Incentive Plan
|
880,000
|
1.23
|
|
September 29, 2022
|
Options
|
Grant under 2020 Incentive Plan
|
164,000
|
1.40
|
|
October 4, 2022
|
Common Shares
|
Exercise of stock options
|
10,000
|
0.40
|
|
October 4, 2022
|
Common Shares
|
Exercise of stock options
|
5,000
|
0.30
|
|
October 28, 2022
|
Common Shares
|
Settlement of restricted share units
|
12,572
|
4.29
|
|
October 28, 2022
|
Common Shares
|
Settlement of restricted share units
|
13,837
|
2.15
|
|
November 30, 2022
|
Restricted Share Units
|
Grant under 2020 Incentive Plan
|
7,926
|
1.36
|
|
November 30, 2022
|
Performance Share Units
|
Grant under 2020 Incentive Plan
|
7,926
|
1.36
|
|
November 30, 2022
|
Options
|
Grant under 2020 Incentive Plan
|
60,000
|
1.36
|
TRADING PRICES AND
VOLUMES
The Common Shares are listed on the
TSX and the NASDAQ under the trading symbol "OGI". The following
tables set forth the reported adjusted close high and low prices
and monthly trading volumes of the Common Shares for the 12-month
period prior to the date of this Prospectus Supplement.
|
|
Trading of Common Shares
|
Trading of Common Shares
|
|
|
TSX
|
NASDAQ
|
|
|
High
|
Low
|
Volume
|
High
|
Low
|
Volume
|
|
|
($)
|
($)
|
(#)
|
(US$)
|
(US$)
|
(#)
|
|
December 2021
|
2.69
|
2.19
|
40,496,474
|
2.13
|
1.71
|
139,115,746
|
|
January 2022
|
2.29
|
1.66
|
29,403,269
|
1.855
|
1.30
|
119,198,908
|
|
February 2022
|
2.21
|
1.69
|
26,381,293
|
1.74
|
1.30
|
84,071,766
|
|
March 2022
|
2.32
|
1.65
|
26,281,479
|
1.87
|
1.27
|
120,100,455
|
|
April 2022
|
2.29
|
1.74
|
19,339,219
|
1.82
|
1.35
|
112,695,827
|
|
May 2022
|
1.93
|
1.43
|
14,996,089
|
1.507
|
1.10
|
129,621,803
|
|
June 2022
|
1.48
|
1.17
|
10,354,813
|
1.18
|
0.91
|
47,679,999
|
|
July 2022
|
1.55
|
1.17
|
9,570,382
|
1.2
|
0.90
|
45,356,378
|
|
August 2022
|
1.63
|
1.30
|
13,572,697
|
1.27
|
1.00
|
45,861,583
|
|
September 2022
|
1.45
|
1.18
|
5,733,368
|
1.11
|
0.87
|
19,690,821
|
|
October 2022
|
1.46
|
1.17
|
8,237,676
|
1.08
|
0.84
|
23,784,021
|
|
November 2022
|
1.44
|
1.22
|
8,502,511
|
1.06
|
0.90
|
20,681,622
|
|
December 1 to December 16, 2022
|
1.71
|
1.17
|
8,214,801
|
1.27
|
0.86
|
21,757,239
|
CERTAIN CANADIAN FEDERAL INCOME
TAX CONSIDERATIONS
The following is, as of the date of
this Prospectus Supplement, a general summary of the principal
Canadian federal income tax considerations under the Income Tax
Act (Canada) and the regulations thereunder (collectively, the
"Tax Act") generally applicable to an investor who acquires
as beneficial owner Warrant Shares upon exercise of the Warrants,
and who, for the purposes of the Tax Act and at all relevant times,
deals at arm's length with the Corporation, is not affiliated with
the Corporation and who holds the Warrants pursuant to which their
Warrant Shares are acquired, and acquires and holds the Warrant
Shares as capital property (a "Holder"). Generally, the
Warrants and Warrant Shares will be considered to be capital
property to a Holder thereof provided that the Holder does not hold
the Warrants or Warrant Shares in the course of carrying on a
business of trading or dealing in securities and such Holder has
not acquired them in one or more transactions considered to be an
adventure or concern in the nature of trade.
This summary does not apply to a
Holder (i) that is a "financial institution" for the purposes of
the mark-to-market rules contained in the Tax Act; (ii) that is a
"specified financial institution" as defined in the Tax Act; (iii),
an interest in which would be a "tax shelter investment" as defined
in the Tax Act; (iv) that has made a functional currency reporting
election under the Tax Act to report in a currency other than the
Canadian dollar; (v) that has or will enter into a "derivative
forward agreement", as that term is defined in the Tax Act, with
respect to the Warrants or Warrant Shares. Such Holders should
consult their own tax advisors with respect to an investment in the
Warrant Shares; or (vi) that receives dividends on Warrant Shares
under or as part of a "dividend rental arrangement" as defined in
the Tax Act. This summary does not address (i) the deductibility of
interest by a Holder who has borrowed money to acquire Warrants or
Warrant Shares upon the exercise of such Warrants, (ii) the tax
treatment of any payments made in connection with the buy-in
rights, or (iii) the application of the "split income" rules in
section 120.4 of the Tax Act.
Additional considerations, not
discussed herein, may be applicable to a Holder that is a
corporation resident in Canada, and that is or becomes, or does not
deal at arm's length for purposes of the Tax Act with a corporation
resident in Canada that is or becomes, as part of a transaction or
event or series of transactions or events that includes the
acquisition of the Warrant Shares, controlled by a non-resident
corporation or other person, or a group of non-resident persons
(including corporations) not dealing with each other at arm's
length, for purposes of the "foreign affiliate dumping" rules in
section 212.3 of the Tax Act. Such Holders should consult their tax
advisors with respect to the consequences of acquiring Warrant
Shares pursuant to the exercise of the Warrants.
This summary is based upon the
current provisions of the Tax Act in force as of the date hereof
and counsel's understanding of the current published administrative
and assessing practices of the Canada Revenue Agency (the
"CRA"). This summary takes into account all specific
proposals to amend the Tax Act publicly announced by or on behalf
of the Minister of Finance (Canada) prior to the date hereof (the
"Tax Proposals") and assumes that the Tax Proposals will be
enacted in the form proposed, although no assurance can be given
that the Tax Proposals will be enacted in their current form or at
all. This summary does not otherwise take into account any changes
in law or in the administrative policies or assessing practices of
the CRA, whether by legislative, governmental or judicial decision
or action, nor does it take into account or consider any
provincial, territorial or foreign income tax considerations, which
considerations may differ significantly from the Canadian federal
income tax considerations discussed in this summary.
This summary is of a general nature
only, is not exhaustive of all possible Canadian federal income tax
considerations and is not intended to be, nor should it be
construed to be, legal or tax advice to any particular Holder.
Holders should consult their own tax advisors with respect to their
particular circumstances.
Acquisition of Warrant
Shares
No gain or loss will be realized by
a Holder on the exercise of a Warrant to acquire a Warrant Share.
When a Warrant is exercised, the Holder's cost of the Warrant Share
acquired thereby will be equal to the aggregate of the Holder's
adjusted cost base of such Warrant and the exercise price paid for
the Warrant Share. The Holder's adjusted cost base of the Warrant
Share so acquired will be determined by averaging the cost of the
Warrant Share with the adjusted cost base to the Holder of all
Common Shares of the Corporation held as capital property
immediately before the acquisition of the Warrant Share.
Residents of Canada
The following section of this
summary applies to Holders who, for the purposes of the Tax Act,
are or are deemed to be resident in Canada at all relevant times
("Resident Holders"). Certain Resident Holders whose Warrant
Shares might not constitute capital property may make, in certain
circumstances, an irrevocable election permitted by subsection
39(4) of the Tax Act to deem Warrant Shares, and every other
"Canadian security" as defined in the Tax Act, held by such
persons, in the taxation year of the election and each subsequent
taxation year to be capital property. This election does not apply
to Warrants. Resident Holders should consult their own tax advisors
regarding this election.
Dividends
Dividends received or deemed to be
received on the Warrant Shares are required to be included in
computing a Resident Holder's income. In the case of a Resident
Holder that is an individual (other than certain trusts), such
dividends will be subject to the gross-up and dividend tax credit
rules normally applicable in respect of "taxable dividends"
received from "taxable Canadian corporations" (each as defined in
the Tax Act). An enhanced dividend tax credit will be available to
individuals in respect of "eligible dividends" designated by the
Corporation to the Resident Holder in accordance with the
provisions of the Tax Act. A dividend will be an eligible dividend
if the recipient receives written notice (which may include a
notice published on the Corporation's website) from the Corporation
designating the dividend as an "eligible dividend". There may be
limitation on the Corporation's ability to designate dividends as
"eligible dividends".
Dividends received or deemed to be
received by a corporation that is a Resident Holder on the Warrant
Shares are required to be included in computing its income but
generally will be deductible in computing its taxable income. In
certain circumstances, section 55(2) of the Tax Act will treat a
taxable dividend received (or deemed to be received) by a Resident
Holder that is a corporation as proceeds of dispositions or a
capital gain. Resident Holders that are corporations should consult
their own tax advisors having regard to their own
circumstances.
A Resident Holder that is a
"private corporation" (as defined in the Tax Act) or a corporation
controlled, whether because of a beneficial interest in one or more
trusts, or otherwise, by or for the benefit of an individual (other
than a trust) or related group of individuals (other than trusts)
generally will be liable to pay an additional tax (refundable in
certain circumstances) under Part IV of the Tax Act on dividends
received or deemed to be received on the Warrant Shares to the
extent such dividends are deductible in computing the Resident
Holder's taxable income for the year.
Dispositions of Warrant
Shares
Upon a disposition (or a deemed
disposition) of a Warrant Share, a Resident Holder generally will
realize a capital gain (or a capital loss) equal to the amount, if
any, by which the proceeds of disposition of such Warrant Share,
net of any reasonable costs of disposition, are greater (or are
less) than the adjusted cost base of such Warrant Share to the
Resident Holder. The tax treatment of capital gains and capital
losses is discussed in greater detail below under the subheading
"Capital Gains and Capital Losses".
Capital Gains and Capital
Losses
Generally, a Resident Holder is
required to include in computing its income for a taxation year
one-half of the amount of any capital gain (a "taxable capital
gain") realized in the year. Subject to and in accordance with
the provisions of the Tax Act, a Resident Holder is required to
deduct one-half of the amount of any capital loss (an "allowable
capital loss") realized in a taxation year from taxable capital
gains realized in the year by such Resident Holder. Allowable
capital losses in excess of taxable capital gains may be carried
back and deducted in any of the three preceding taxation years or
carried forward and deducted in any following taxation year against
net taxable capital gains realized in such year to the extent and
under the circumstances described in the Tax Act.
The amount of any capital loss
realized on the disposition or deemed disposition of Warrant Shares
by a Resident Holder that is a corporation may be reduced by the
amount of dividends received or deemed to have been received by it
on such shares or shares substituted for such shares to the extent
and in the circumstances specified by the Tax Act. Analogous rules
apply to a partnership or trust of which a corporation, trust or
partnership is a member or beneficiary. Resident Holders to whom
these rules may be relevant should consult their own tax
advisors.
A Resident Holder that is
throughout the relevant taxation year a "Canadian-controlled
private corporation" (as defined in the Tax Act) may be liable to
pay an additional tax (refundable in certain circumstances) on its
"aggregate investment income" for the year, including amounts in
respect of net taxable capital gains. Proposed Amendments extend
this additional tax and refund mechanism in respect of "aggregate
investment income" to "substantive CCPCs" (as defined in the
Proposed Amendments) and introduce anti-avoidance rules that could
deem certain corporations resident in Canada that do not otherwise
qualify as "substantive CCPCs" to so qualify. Resident Holders
should consult their own advisors with respect to the application
of the Proposed Amendments.
Minimum Tax
Capital gains realized and
dividends received or deemed to be received by a Resident Holder
that is an individual (other than certain trusts) may give rise to
minimum tax under the Tax Act. Resident Holders should consult
their own advisors with respect to the application of minimum
tax.
Non-Residents of Canada
The following section of this
summary is generally applicable to Holders who (i) for the purposes
of the Tax Act, have not been and will not be deemed to be resident
in Canada at any time while they hold the Warrants or Warrant
Shares; and (ii) do not use or hold the Warrants or Warrant Shares
in connection with carrying on a business in Canada
("Non-Resident Holders"). Special rules, which are not
discussed in this summary, may apply to a Non-Resident Holder that
is an insurer carrying on business in Canada and elsewhere. Such
Holders should consult their own tax advisors.
Dividends
Dividends paid or credited or
deemed to be paid or credited on the Warrant Shares to a
Non-Resident Holder are subject to Canadian withholding tax at the
rate of 25% on the gross amount of the dividend unless such rate is
reduced by the terms of an applicable tax treaty. For example,
under the Canada-United States Tax Convention (1980), as amended as
of the date hereof (the "Treaty"), the rate of withholding
tax on dividends paid or credited to a Non-Resident Holder who is
resident in the U.S. for purposes of the Treaty and entitled to
benefits under the Treaty (a "U.S. Holder") is generally
limited to 15% of the gross amount of the dividend.
Dispositions of Warrants and
Warrant Shares
A Non-Resident Holder generally
will not be subject to tax under the Tax Act in respect of a
capital gain realized on the disposition or deemed disposition of a
Warrant Share nor will capital losses arising therefrom be
recognized under the Tax Act, unless the Warrant Share constitutes
"taxable Canadian property" to the Non-Resident Holder thereof for
purposes of the Tax Act, and the gain is not exempt from tax
pursuant to the terms of an applicable tax treaty.
Provided the Warrant Shares are
listed on a "designated stock exchange", as defined in the Tax Act
(which currently includes the TSX and the NASDAQ), at the time of
disposition, the Warrant Shares generally will not constitute
taxable Canadian property of a Non-Resident Holder at that time,
unless at any time during the 60-month period immediately preceding
the disposition, the following two conditions are met: (i) 25% or
more of the issued shares of any class or series of the share
capital of the Corporation were owned by, or belonged to, one or
any combination of (x) the Non-Resident Holder, (y) persons with
whom the Non-Resident Holder did not deal at arm's length (within
the meaning of the Tax Act), and (z) partnerships in which the
Non-Resident Holder or a person referred to in (y) holds a
membership interest directly or indirectly through one or more
partnerships, and (ii) more than 50% of the fair market value of
the Common Shares, was derived directly or indirectly from one or
any combination of: (A) real or immovable property situated in
Canada, (B) Canadian resource property (as defined in the Tax Act),
(C) timber resource property (as defined in the Tax Act), and (D)
options in respect of, or interests in, or for civil law rights in,
property described in any of (A) through (C) above, whether or not
such property exists.
A Non-Resident Holder's capital
gain (or capital loss) in respect of Warrant Shares that constitute
or are deemed to constitute taxable Canadian property (and are not
"treaty-protected property" as defined in the Tax Act) will
generally be computed in the manner described above under the
subheading "Residents of Canada-Dispositions of Warrant
Shares".
Non-Resident Holders whose Warrant
Shares may be taxable Canadian property should consult their own
tax advisors, including with respect to any notification or tax
filing obligations under the Tax Act.
CERTAIN U.S. FEDERAL INCOME TAX
CONSIDERATIONS
The following is a general summary
of certain material U.S. federal income tax considerations
applicable to a U.S. Holder (as defined below) arising from and
relating to the acquisition, ownership, and disposition of
Warrants, and Warrant Shares upon exercise of the Warrants that was
prepared by Hodgson Russ LLP, counsel to the Corporation with
respect to U.S. federal income tax matters.
This summary is for general
information purposes only and does not purport to be a complete
analysis or listing of all potential U.S. federal income tax
considerations that may apply to a U.S. Holder arising from and
relating to the acquisition, ownership, and disposition of Warrants
or Warrant Shares. In addition, this summary does not take into
account the individual facts and circumstances of any particular
U.S. Holder that may affect the U.S. federal income tax
consequences to such U.S. Holder, including, without limitation,
specific tax consequences to a U.S. Holder under an applicable
income tax treaty. Accordingly, this summary is not intended to be,
and should not be construed as, legal or U.S. federal income tax
advice with respect to any U.S. Holder. Except as specifically set
forth below, this summary does not address the U.S. federal net
investment income, U.S. federal alternative minimum, U.S. federal
estate and gift, U.S. state and local, and non-U.S. tax
consequences to U.S. Holders of the acquisition, ownership, and
disposition of Warrants or Warrant Shares. In addition, except as
specifically set forth below, this summary does not discuss
applicable tax reporting requirements. Each prospective U.S. Holder
should consult its own tax advisors regarding the U.S. federal,
U.S. federal alternative minimum, U.S. federal estate and gift,
U.S. state and local, and non-U.S. tax consequences relating to the
acquisition, ownership, and disposition of Warrants or Warrant
Shares.
No legal opinion from U.S. legal
counsel or ruling from the Internal Revenue Service (the
"IRS") has been requested, or will be obtained, regarding
the U.S. federal income tax consequences of the acquisition,
ownership, and disposition of Warrants or Warrant Shares. This
summary is not binding on the IRS, and the IRS is not precluded
from taking a position that is different from, and contrary to, the
positions taken in this summary. In addition, because the
authorities on which this summary are based are subject to various
interpretations, the IRS and the U.S. courts could disagree with
one or more of the conclusions described in this summary.
Scope of this Summary
Authorities
This summary is based on the U.S.
Internal Revenue Code of 1986, as amended (the "Code"),
Treasury Regulations (whether final, temporary, or proposed),
published rulings of the IRS, published administrative positions of
the IRS, the Treaty, and U.S. court decisions that are applicable,
and, in each case, as in effect and available, as of the date of
this Prospectus Supplement. Any of the authorities on which this
summary is based could be changed in a material and adverse manner
at any time, and any such change could be applied retroactively or
prospectively. This summary does not discuss the potential effects,
whether adverse or beneficial, of any proposed legislation that, if
enacted, could be applied on a retroactive or prospective
basis.
U.S. Holders
For purposes of this summary, the
term "U.S. Holder" means a beneficial owner of Warrants or
Warrant Shares that is for U.S. federal income tax purposes:
- an individual who is a citizen or
resident of the United States;
- a corporation (or other entity
treated as a corporation for U.S. federal income tax purposes)
organized in or under the laws of the United States, any state
thereof or the District of Columbia;
- an estate whose income is subject
to U.S. federal income taxation regardless of its source; or
- a trust that (1) is subject to the
primary supervision of a court within the United States and is
under the control of one or more U.S. persons for all substantial
decisions or (2) has a valid election in effect under applicable
Treasury Regulations to be treated as a U.S. person.
Non-U.S. Holders
For purposes of this summary, a
"non-U.S. Holder" is a beneficial owner of Warrants or
Warrant Shares that is not a U.S. Holder. This summary does not
address the U.S. federal income tax consequences applicable to
non-U.S. Holders. Accordingly, a non-U.S. Holder should consult its
own tax advisor regarding the tax consequences (including the
potential application of and operation of any income tax treaties)
related to the acquisition, ownership and disposition of Warrants
or Warrant Shares.
In addition, this summary assumes
that the Corporation is not a "controlled foreign corporation" for
U.S. federal income tax purposes.
U.S. Holders Subject to
Special U.S. Federal Income Tax Rules Not Addressed
This summary does not address the
U.S. federal income tax considerations applicable to U.S. Holders
that are subject to special provisions under the Code, including,
but not limited to, U.S. Holders that: (a) are tax-exempt
organizations, qualified retirement plans, individual retirement
accounts, or other tax-deferred accounts; (b) are financial
institutions, underwriters, insurance companies, real estate
investment trusts, or regulated investment companies; (c) are
broker-dealers, dealers, or traders in securities or currencies
that elect to apply a mark-to-market accounting method; (d) have a
"functional currency" other than the U.S. dollar; (e) own Warrants
or Warrant Shares as part of a straddle, hedging transaction,
conversion transaction, constructive sale, or other arrangement
involving more than one position; (f) acquire Warrants or Warrant
Shares in connection with the exercise of employee stock options or
otherwise as compensation for services; (g) hold Warrants or
Warrant Shares other than as a capital asset within the meaning of
Section 1221 of the Code (generally, property held for investment
purposes); (h) are required to accelerate the recognition of any
item of gross income with respect to Warrants or Warrant Shares as
a result of such income being recognized on an applicable financial
statement; or (i) own, have owned or will own (directly,
indirectly, or by attribution) 10% or more of the total combined
voting power or value of the outstanding shares of the Corporation.
This summary also does not address the U.S. federal income tax
considerations applicable to U.S. Holders who are: (a) U.S.
expatriates or former long-term residents of the U.S.; (b) persons
that have been, are, or will be a resident or deemed to be a
resident in Canada for purposes of the Tax Act; (c) persons that
use or hold, will use or hold, or that are or will be deemed to use
or hold Warrants or Warrant Shares in connection with carrying on a
business in Canada; (d) persons whose Warrants or Warrant Shares
constitute "taxable Canadian property" under the Tax Act; or (e)
persons that have a permanent establishment in Canada for the
purposes of the Treaty and that use or hold Warrants or Warrant
Shares in connection with such permanent establishment. U.S.
Holders that are subject to special provisions under the Code,
including, but not limited to, U.S. Holders described immediately
above, should consult their own tax advisors regarding the U.S.
federal income, U.S. federal alternative minimum, U.S. federal
estate and gift, U.S. state and local, and non-U.S. tax
consequences relating to the acquisition, ownership and disposition
of Warrants or Warrant Shares.
If an entity or arrangement that is
classified as a partnership (or other "pass-through" entity) for
U.S. federal income tax purposes holds Warrants or Warrant Shares,
the U.S. federal income tax consequences to such entity and the
partners (or other owners) of such entity generally will depend on
the activities of the entity and the status of such partners (or
owners). This summary does not address the tax consequences to any
such partner (or owner). Partners (or other owners) of entities or
arrangements that are classified as partnerships or as
"pass-through" entities for U.S. federal income tax purposes should
consult their own tax advisors regarding the U.S. federal income
tax consequences arising from and relating to the acquisition,
ownership, and disposition of Warrants or Warrant Shares.
THIS DISCUSSION IS FOR
INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. PROSPECTIVE
PURCHASERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING
THE APPLICATION OF THE U.S. FEDERAL TAX RULES TO THEIR PARTICULAR
CIRCUMSTANCES AS WELL AS THE STATE, LOCAL, AND NON-U.S. TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF
WARRANTS OR WARRANT SHARES.
Exercise, Disposition or
Expiration of Warrants
Exercise of
Warrants
The U.S. federal income tax
treatment of the exercise of a Warrant is uncertain, and the U.S.
tax consequences of the exercise of a Warrant could differ from
what is described herein. Subject to the foregoing sentence, and
the discussion below under "Passive Foreign Investment Company
Rules", a U.S. Holder generally should not recognize gain or loss
on the exercise of a Warrant and related receipt of a Warrant
Share. A U.S. Holder's initial tax basis in the Warrant Share
received on the exercise of a Warrant should be equal to the sum of
(a) such U.S. Holder's tax basis in such Warrant plus (b) the
exercise price paid by such U.S. Holder on the exercise of such
Warrant. The holding period for the Warrant Share may or may not
include the period during which the U.S. Holder held the Warrant.
Each U.S. Holder should consult its own tax advisor regarding the
proper treatment of an exercise of a Warrant and the tax basis in,
and the holding period for, the Warrant Share received on such
exercise.
Sale or Other Taxable
Disposition of Warrants
A U.S. Holder will recognize gain
or loss on the sale or other taxable disposition of a Warrant in an
amount equal to the difference, if any, between (a) the amount of
cash plus the fair market value of any property received and (b)
such U.S. Holder's tax basis in the Warrant sold or otherwise
disposed of. Subject to the discussion under "Passive Foreign
Investment Company Rules" below, any such gain or loss
generally will be a capital gain or loss (provided that the Warrant
Share to be issued on the exercise of such Warrant would have been
a capital asset within the meaning of Section 1221 of the Code if
acquired by the U.S. Holder), which will be long-term capital gain
or loss if the Warrant is held for more than one year.
Expiration of Warrants
Without Exercise
Subject to the discussion under
"Passive Foreign Investment Company Rules" below, upon the
lapse or expiration of a warrant, a U.S. Holder will recognize a
loss in an amount equal to such U.S. Holder's tax basis in the
Warrant. Any such loss generally will be a capital loss and will be
long-term capital loss if the Warrants are held for more than one
year. Deductions for capital losses are subject to complex
limitations under the Code.
Certain Adjustments to the
Warrants
Under Section 305 of the Code, an
adjustment to the number of Warrant Shares that will be issued on
the exercise of the Warrants, or an adjustment to the exercise
price of the Warrants may be treated as a constructive distribution
to a U.S. Holder of the Warrants if, and to the extent that, such
adjustment has the effect of increasing such U.S. Holder's
proportionate interest in the "earnings and profits" or assets of
the Corporation, depending on the circumstances of such adjustment
(for example, if such adjustment is to compensate for a
distribution of cash or other property to shareholders of the
Corporation). As discussed under "Dividend Policy" above, the
Corporation does not intend to pay dividends on any of its Common
Shares in the foreseeable future. In addition, an adjustment made
pursuant to a bona fide reasonable adjustment formula that
has the effect of preventing dilution of the interest of the
holders of the Warrants generally should not be considered to
result in a constructive distribution. Each U.S. Holder should
consult its own tax advisor regarding the proper treatment of any
adjustment to the number of Warrant Shares that will be issued on
the exercise of the Warrants or an adjustment to the exercise price
of the Warrants.
Ownership and Disposition of
Warrant Shares
The following discussion is subject
in its entirety to the rules described below under the heading
"Passive Foreign Investment Company Rules".
Distributions on Warrant
Shares
A U.S. Holder that receives a
distribution, including a constructive distribution, with respect
to a Warrant Share will be required to include the amount of such
distribution in gross income as a dividend (without reduction for
any foreign income tax withheld from such distribution) to the
extent of the current or accumulated "earnings and profits" of the
Corporation, as computed for U.S. federal income tax purposes. To
the extent that a distribution exceeds the current and accumulated
"earnings and profits" of the Corporation, such distribution will
be treated first as a tax-free return of capital to the extent of a
U.S. Holder's tax basis in the Warrant Shares and thereafter as
gain from the sale or exchange of such Warrant Shares (see "Sale
or Other Taxable Disposition of Warrant Shares" below).
However, the Corporation may not maintain the calculations of its
earnings and profits in accordance with U.S. federal income tax
principles, and each U.S. Holder may have to assume that any
distribution by the Corporation with respect to the Warrant Shares
will constitute dividend income. Dividends received on Warrant
Shares by corporate U.S. Holders generally will not be eligible for
the "dividends received deduction". Subject to applicable
limitations and provided the Corporation is eligible for the
benefits of the Treaty or the Warrant Shares are readily tradable
on a United States securities market, dividends paid by the
Corporation to non-corporate U.S. Holders, including individuals,
generally will be eligible for the preferential tax rates
applicable to qualified dividends, provided certain holding period
and other conditions are satisfied, including that the Corporation
not be classified as a "passive foreign investment company"
("PFIC") in the tax year of distribution or in the preceding
tax year.
For U.S. federal income tax
purposes, U.S. Holders will be treated as having received the
amount of any Canadian taxes withheld by the Corporation, and as
then having paid over the withheld taxes to the Canadian taxing
authorities. As a result of this rule, the amount of dividend
income included in gross income for U.S. federal income tax
purposes by a U.S. Holder with respect to a payment of dividends
may be greater than the amount of cash actually received (or
receivable) by the U.S. Holder from the Corporation with respect to
the payment.
The dividend rules are complex, and
each U.S. Holder should consult its own tax advisor regarding the
application of such rules.
Sale or Other Taxable
Disposition of Warrant Shares
A U.S. Holder will recognize gain
or loss on the sale or other taxable disposition of Warrant Shares
in an amount equal to the difference, if any, between (a) the
amount of cash plus the fair market value of any property received
and (b) such U.S. Holder's tax basis in such Warrant Shares sold or
otherwise disposed of. If the Corporation is not a PFIC, any such
gain or loss generally will be capital gain or loss, which will be
long-term capital gain or loss if, at the time of the sale or other
disposition, such Warrant Shares are held for more than one year.
If the consideration a U.S. Holder receives for the Warrant Shares
is not paid in U.S. dollars, the amount realized will be determined
using the rules described under "Additional Considerations-Use
of Foreign Currency to Acquire Warrants or Warrant Shares or
Receipt of Foreign Currency." A U.S. Holder's tax basis in its
Warrant Shares generally will equal the U.S. dollar cost of such
Warrant Shares. If a U.S. Holder uses foreign currency to acquire
Warrant Shares, the cost of the Warrant Shares will be determined
using the rules described under "Additional Considerations-Use
of Foreign Currency to Acquire Warrants or Warrant Shares or
Receipt of Foreign Currency."
Preferential tax rates apply to
long-term capital gains of a U.S. Holder that is an individual,
estate, or trust, if the Corporation is not a PFIC. There are
currently no preferential tax rates for long-term capital gains of
a U.S. Holder that is a corporation. Deductions for capital losses
are subject to significant limitations under the Code.
Passive Foreign Investment
Company Rules
U.S. Holders generally would be
subject to a special, adverse tax regime that would differ in
certain respects from the tax treatment described above if the
Corporation is, or were to become, a PFIC for U.S. federal income
tax purposes. The determination as to whether a non-U.S.
corporation is a PFIC is based on the application of complex U.S.
federal income tax rules, which are subject to differing
interpretations, and on many factors that can change from time to
time, including fluctuations in the market price of the
Corporation's Common Shares. The general rule is that the
Corporation would be a PFIC if, for a tax year, (a) 75% or more of
its gross income for such tax year is passive income or (b) 50% or
more of the value of its gross assets either produce passive income
or are held for the production of passive income, based on the
quarterly average of the fair market value of such assets. "Gross
income" generally includes all sales revenues less the cost of
goods sold, plus income from investments and from incidental or
outside operations or sources, and "passive income" generally
includes dividends, interest, certain rents and royalties, and
certain types of gains (such as from the sale of stock and
securities). For purposes of determining whether the Corporation is
a PFIC, the Corporation will be treated as holding its
proportionate share of the assets and receiving directly its
proportionate share of the income of any other corporation in which
it owns, directly or indirectly, more than 25% (by value) of the
stock.
The Corporation has not made any
determination of its PFIC status for the current year. The
Corporation also has not made a PFIC determination for any prior
taxable year. Therefore, there is no assurance that the Corporation
has not been a PFIC in prior taxable years, nor that the
Corporation will not be a PFIC in its current taxable year or
become a PFIC in any future taxable year. No opinion is expressed
with respect to the Corporation's PFIC status for prior, current or
future taxable years.
If the Corporation is a PFIC with
respect to a U.S. Holder, and the U.S. Holder does not make either
of the elections described below, gain from the disposition of the
Common Shares and certain distributions classified as "excess
distributions" (generally, those that are in excess of 125% of the
average amount of distributions in the three prior tax years) would
be subject to ordinary income treatment and allocated ratably to
days in a U.S. Holder's holding period in computing the U.S.
Holder's tax liability. Proposed Treasury Regulations generally
treat "options" (which would include the Warrants) to acquire stock
of a PFIC as stock of a PFIC. The amounts allocated to the taxable
year during which the gain is realized or excess distribution is
made, and to any taxable years in such U.S. Holder's holding period
that are before the first taxable year in which the Corporation is
treated as a PFIC with respect to that U.S. Holder, would be
included in the U.S. Holder's gross income as ordinary income for
the taxable year of the gain or excess distribution. The amount
allocated to each other taxable year would be taxed as ordinary
income in the taxable year during which the gain is realized or
excess distribution is made at the highest tax rate in effect for
the U.S. Holder in that other taxable year and would be subject to
an interest charge as if the income tax liabilities had been due
with respect to each such prior year. Under proposed Treasury
Regulations, gifts, exchanges pursuant to corporate reorganizations
and pledging or use of Common Shares as security for a loan would
be treated as a taxable disposition of the Common Shares and
subject to the foregoing tax treatment.
If the Corporation is a PFIC, the
U.S. Holder may be able to mitigate the adverse tax effects of the
PFIC rules described above if the U.S. Holder makes a "qualified
electing fund" ("QEF") or a "mark to market" election. The
QEF election or mark-to-market election is currently unavailable
with respect to the Warrants. If a U.S. Holder makes a timely QEF
election for the first tax year in which its holding period of its
Common Shares begins, such U.S. Holder generally will not be
subject to the PFIC rules described above with respect to such
Common Shares. However, under the QEF regime, in each taxable year
that the Corporation is considered a PFIC the U.S. Holder must
include in gross income (i) as ordinary income, the U.S. Holder's
pro rata share of the ordinary earnings of the Corporation and (ii)
as capital gain, the U.S. Holder's pro rata share of the net
capital gain of the Corporation, regardless of whether the
Corporation makes a distribution on the Common Shares.
Distributions of income that had previously been taxed under the
QEF regime will not be taxed again when such distributions are made
to the U.S. Holder. Subject to certain restrictions, a U.S. Holder
may elect to defer payment of current U.S. federal income tax on
such amounts included in income under the QEF regime, but a
non-deductible interest charge would be applied. As noted above, a
U.S. Holder may not make a QEF election with respect to its
Warrants. Under the QEF rules, the electing U.S. Holder must supply
certain information to the IRS that the U.S. Holder would need to
obtain from the Corporation. If the Corporation has reason to
believe it may be a PFIC in a particular taxable year, and if so
requested by a U.S. Holder for such taxable year, the Corporation
will use commercially reasonable efforts to make available such
information to the U.S. Holder.
If the Corporation is a PFIC, a
U.S. Holder may make a "mark to market" election as an alternative
to a QEF election, as long as the Common Shares are treated as
regularly traded on a qualified exchange or other market within the
meaning of the applicable Treasury Regulations. The consequence of
a mark to market election is that a U.S. Holder must include in his
gross income, as ordinary income, an amount equal to the excess, if
any, of the fair market value of the U.S. holder's Common Shares at
the close of the taxable year over the U.S. Holder's adjusted tax
basis in the Common Shares. If the fair market value of the U.S.
Holder's Common Shares at the end of the taxable year is less than
the adjusted tax basis of the U.S. Holder in the Common Shares, an
ordinary loss deduction may be claimed, but only to the extent of
any mark to market gains previously included in income. The U.S.
Holder's tax basis in the Common Shares will be adjusted to reflect
such inclusions or deductions. Gain or loss on disposition of the
Common Shares will be ordinary income or loss. As noted above, a
mark-to-market election may not be made with respect to the
Warrants.
During any taxable year in which
the Corporation or any of its subsidiaries is treated as a PFIC
with respect to a U.S. Holder, that U.S. Holder may be required to
file IRS Form 8621, ("Information Return by a Shareholder of a
Passive Foreign Investment Company or Qualified Electing
Fund").
A U.S. Holder should consult their
own tax advisor regarding the potential applicability of the PFIC
rules to an investment in the Warrant Shares, as well as the
advisability of making a QEF election (including on a protective
basis) or a mark-to-market election.
Additional
Considerations
Additional Tax on Passive
Income
Certain individuals, estates and
trusts whose income exceeds certain thresholds will be required to
pay a 3.8% Medicare surtax on "net investment income" including,
among other things, dividends and net gain from disposition of
property (other than property held in certain trades or
businesses). U.S. Holders should consult their own tax advisors
regarding the application, if any, of this tax on their ownership
and disposition of Warrants or Warrant Shares.
Use of Foreign Currency to
Acquire Warrants or Warrant Shares or Receipt of Foreign
Currency
A U.S. Holder's tax basis in its
Warrants or Warrant Shares generally will equal the U.S. dollar
cost of such Warrants or Warrant Shares. If a U.S. Holder uses
foreign currency to purchase Warrant Shares, the cost of the
Warrants or Warrant Shares will be the U.S. dollar value of the
foreign currency purchase price determined by reference to the spot
rate of exchange on the date of purchase. However, if the Warrants
or Warrant Shares are treated as traded on an established
securities market and the U.S. Holder is either a cash basis
taxpayer or an accrual basis taxpayer who has made a special
election (which must be applied consistently from year to year and
cannot be changed without the consent of the IRS), such U.S. Holder
will determine the U.S. dollar value of the cost of such Warrants
or Warrant Shares by translating the amount paid at the spot rate
of exchange on the settlement date of the purchase.
The amount of any distribution paid
to a U.S. Holder in foreign currency, or on the sale, exchange or
other taxable disposition of Warrants or Warrant Shares, generally
will be equal to the U.S. dollar value of such foreign currency
based on the exchange rate applicable on the date of receipt
(regardless of whether such foreign currency is converted into U.S.
dollars at that time). However, in the case of sale, exchange, or
other taxable disposition of Warrants or Warrant Shares, if the
Warrants or Warrant Shares are treated as traded on an "established
securities market" and the U.S. Holder is either a cash basis
taxpayer or an accrual basis taxpayer that has made a special
election (which must be applied consistently from year to year and
cannot be changed without the consent of the IRS), such U.S. Holder
will determine the U.S. dollar value of the amount realized in a
foreign currency by translating the amount received at the spot
rate of exchange on the settlement date of the sale.
A U.S. Holder will have a basis in
the foreign currency equal to its U.S. dollar value on the date of
receipt. Any U.S. Holder who converts or otherwise disposes of the
foreign currency after the date of receipt may have a foreign
currency exchange gain or loss that would be treated as ordinary
income or loss, and generally will be U.S. source income or loss
for foreign tax credit purposes. Different rules apply to U.S.
Holders who use the accrual method of tax accounting. Each U.S.
Holder should consult its own U.S. tax advisor regarding the U.S.
federal income tax consequences of receiving, owning, and disposing
of foreign currency.
Foreign Tax
Credit
Subject to the PFIC rules discussed
above, a U.S. Holder that pays (whether directly or through
withholding) Canadian income tax with respect to dividends paid on
the Warrant Shares generally will be entitled, at the election of
such U.S. Holder, to receive either a deduction or a credit for
such Canadian income tax. Generally, a credit will reduce a U.S.
Holder's U.S. federal income tax liability on a dollar-for-dollar
basis, whereas a deduction will reduce a U.S. Holder's income that
is subject to U.S. federal income tax. This election is made on a
year-by-year basis and applies to all foreign taxes paid (whether
directly or through withholding) by a U.S. Holder during a year.
The foreign tax credit rules are complex and involve the
application of rules that depend on a U.S. Holder's particular
circumstances. Accordingly, each U.S. Holder should consult its own
U.S. tax advisor regarding the foreign tax credit rules.
Backup Withholding and
Information Reporting
Under U.S. federal income tax law
and Treasury Regulations, certain categories of U.S. Holders must
file information returns with respect to their investment in, or
involvement in, a foreign corporation. For example, there may be a
requirement to file an IRS Form 8938 ("Statement of Specified
Foreign Financial Assets"), with a U.S. Holder's U.S. tax
return, under special rules that impose U.S. return disclosure
obligations (and related penalties) on individuals who are U.S.
Holders that hold certain specified foreign financial assets in
excess of certain threshold amounts. The definition of specified
foreign financial assets includes not only financial accounts
maintained in foreign financial institutions, but also, may include
assets such as Warrants or Warrant Shares. Other IRS information
reporting on various IRS Forms may also be required with respect to
a U.S. Holder. Penalties for failure to file required information
returns are substantial. U.S. Holders should consult their own tax
advisors regarding the requirements of filing information
returns.
Payments made within the U.S. or by
a U.S. payor or U.S. middleman, of dividends on, and proceeds
arising from the sale or other taxable disposition of, Warrants or
Warrant Shares will generally be subject to information reporting
and backup withholding tax if a U.S. Holder (a) fails to furnish
such U.S. Holder's correct U.S. taxpayer identification number
(generally on Form W-9), (b) furnishes an incorrect U.S. taxpayer
identification number, (c) is notified by the IRS that such U.S.
Holder has previously failed to properly report items subject to
backup withholding tax, or (d) fails to certify, under penalty of
perjury, that such U.S. Holder has furnished its correct U.S.
taxpayer identification number and that the IRS has not notified
such U.S. Holder that it is subject to backup withholding tax.
However, certain exempt persons generally are excluded from these
information reporting and backup withholding rules. Backup
withholding is not an additional tax. Any amounts withheld under
the backup withholding tax rules will be allowed as a credit
against a U.S. Holder's U.S. federal income tax liability, if any,
or will be refunded, if such U.S. Holder furnishes required
information to the IRS in a timely manner.
The discussion of reporting
requirements set forth above is not intended to constitute a
complete description of all reporting requirements that may apply
to a U.S. Holder. A failure to satisfy certain reporting
requirements may result in an extension of the time period during
which the IRS can assess a tax, and under certain circumstances,
such an extension may apply to assessments of amounts unrelated to
any unsatisfied reporting requirement. Each U.S. Holder should
consult its own tax advisor regarding the information reporting and
backup withholding rules.
The above summary is not
intended to constitute a complete analysis of all tax
considerations applicable to U.S. Holders with respect to the
acquisition, ownership, and disposition of Warrants or Warrant
Shares. U.S. Holders should consult their own tax advisors as to
the tax considerations applicable to them in their own particular
circumstances.
RISK FACTORS
An investment in the Warrant Shares
involves certain risks. You should carefully consider, in light of
your own financial circumstances, the risk factors set out below,
as well as the risk factors described under the heading "Risk
Factors" found in the Annual Information Form, the Annual
MD&A, and the Prospectus (at pages 19 to 23). In addition, you
should carefully consider all other information contained in this
Prospectus Supplement, the Prospectus, the documents incorporated
by reference herein and therein (including, without limitation, the
Annual Information Form, and the Annual MD&A), and in all
subsequently filed documents incorporated by reference, before
making an investment decision.
Management of the Corporation
will have broad discretion with respect to the application of the
proceeds received by the Corporation from the exercise of the
Warrants.
Management of the Corporation may
spend the proceeds received by the Corporation upon the exercise of
the Warrants, if any, in ways that do not improve the Corporation's
results of operations or enhance the value of the Warrant Shares or
its other securities issued and outstanding from time to time. Any
failure by management to apply these funds effectively could result
in financial losses that could have a material adverse effect on
the Corporation's business or cause the market price of the
securities of the Corporation issued and outstanding from time to
time to decline.
The Corporation may sell
additional Common Shares or other securities that are convertible
or exchangeable into Common Shares in subsequent offerings or may
issue additional Common Shares or other securities, resulting in
dilution to investors.
The Corporation cannot predict the
size or nature of future sales or issuances of securities or the
effect, if any, that such future sales and issuances will have on
the market price of the Common Shares. Such sales or issuances may
occur for any number of reasons, including to strengthen the
balance sheet of the Corporation or in connection with growth,
acquisitions or strategic opportunities that may be available to
the Corporation. Sales or issuances of substantial numbers of
Common Shares or other securities that are convertible or
exchangeable into Common Shares, or the perception that such sales
or issuances could occur, may adversely affect prevailing market
prices of the Common Shares. With any additional sale or issuance
of Common Shares or other securities that are convertible or
exchangeable into Common Shares, investors will suffer dilution to
their voting power and economic interest in the Corporation.
Furthermore, to the extent holders of the Corporation's stock
options or other convertible securities convert or exercise their
securities and sell the Common Shares they receive, the market
price of the Common Shares may decrease due to the increased number
of Common Shares available in the market.
The market price for the
Common Shares may be volatile and subject to wide fluctuations in
response to numerous factors, many of which are beyond the
Corporation's control.
The market price of our Common
Shares has in the past been, and may in the future be, subject to
large fluctuations which may result in losses for investors. The
factors which may contribute to market price fluctuations of the
Common Shares include the following:
• actual
or anticipated fluctuations in the Corporation's quarterly results
of operations;
• local
or international regulatory and political changes affecting the
Corporation's industry generally and its business and
operations;
• recommendations
by securities research analysts;
• changes
in the economic performance or market valuations of companies in
the industry in which the Corporation operates;
• addition
or departure of the Corporation's executive officers and other key
personnel;
• release
or expiration of transfer restrictions on outstanding Common
Shares;
• sales
or perceived sales of additional Common Shares;
• operating
and financial performance that vary from the expectations of
management, securities analysts and investors;
• announcements
of developments and other material events by the Corporation or its
competitors;
• fluctuations
to the costs or availability of vital production materials and
services;
• changes
in global financial markets and global economies and general market
conditions, such as interest rates and pharmaceutical product price
volatility, and including those caused by COVID-19;
• significant
acquisitions or business combinations, strategic partnerships,
joint ventures or capital commitments by or involving the
Corporation or its competitors;
• operating
and share price performance of other companies that investors deem
comparable to the Corporation; and
• news
reports relating to trends, concerns, technological or competitive
developments, regulatory changes and other related issues in the
Corporation's industry or target markets or in the economy
generally.
The Corporation has not
declared or paid dividends in the past and may not declare or pay
dividends in the future.
Any decision to declare or pay
dividends in the future will be made at the discretion of the Board
and will depend on, among other things, financial results, cash
requirements, contractual restrictions and other factors that the
Board may deem relevant. As a result, investors may not receive any
return on an investment in the Warrant Shares unless they sell
their Warrant Shares for a price greater than that which such
investors paid for them.
Negative Cash Flow from
Operations
During the year ended August 31,
2022, the Corporation had negative cash flow from operating
activities. The Corporation's cash and short-term investments as at
August 31, 2022, was approximately $98,607,000.
The Corporation cannot guarantee
it will have a cash flow positive position in the future. To the
extent that the Corporation has negative cash flow in any future
period, certain of the proceeds received from the exercise of
Warrants may be used to fund such negative cash flow from operating
activities.
Return on Investment
Risk
There is no guarantee that an
investment in the Warrant Shares will earn any positive return in
the short or long term. No dividends on the Common Shares have been
paid to date. A purchase of Warrant Shares involves a high degree
of risk and should be undertaken only by investors whose financial
resources are sufficient to enable them to assume such risks and
who have no need for immediate liquidity in their investment.
Unknown Health Impact of Use of
Cannabis and Derivatives
There is little in the way of
longitudinal studies on the short-term and long-term effects of
cannabis use on human health, whether used for recreational or
medicinal purposes. As such, there are inherent risks associated
with using the Corporation's cannabis and derivative products.
Previously unknown or unforeseeable adverse reactions arising from
human consumption of cannabis products may occur which could
adversely affect social acceptance of cannabis and the demand for
the Corporation's products.
LEGAL MATTERS AND INTEREST OF
EXPERTS
Certain legal matters relating to
this Offering will be passed upon on our behalf by Goodmans LLP,
with respect to certain legal matters relating to Canadian law, and
by Hodgson Russ LLP, with respect to certain legal matters relating
to U.S. tax law. At the date hereof, partners and associates of
each of Goodmans LLP and Hodgson Russ LLP own beneficially,
directly or indirectly, less than 1% of any of our securities or
any securities of our associates or affiliates.
AUDITORS, TRANSFER AGENT AND
REGISTRAR
KPMG LLP are the auditors of the
Corporation. KPMG LLP has confirmed that they are independent with
respect to the Corporation within the meaning of the relevant rules
and related interpretations prescribed by the relevant professional
bodies in Canada and any applicable legislation or regulations and
that they are independent accountants with respect to the
Corporation under all relevant US professional and regulatory
standards.
The transfer agent, warrant agent
and registrar of the Corporation is TSX Trust Company at its
offices in Vancouver, British Columbia and Toronto, Ontario. VStock
Transfer, LLC is the Corporation's co-transfer agent in the United
States.
DOCUMENTS FILED AS PART OF THE
REGISTRATION STATEMENT
The following documents have been
or will be (through incorporation by reference) filed with the SEC
as part of the Registration Statement to which this Prospectus
Supplement forms a part: (a) the documents listed under "Documents
Incorporated by Reference"; (b) the consent of KPMG LLP; (c) the
consent of Hodgson Russ LLP; and (d) powers of attorney from
certain of the Corporation's directors and officers included on the
signature pages of the Registration Statement; and (e) the Warrant
Indenture.
No securities regulatory
authority has expressed an opinion about these securities and it is
an offence to claim otherwise. This short form base shelf
prospectus constitutes a public offering of these securities only
in those jurisdictions where they may be lawfully offered for sale
and therein only by persons permitted to sell such
securities.
Information has been
incorporated by reference in this short form base shelf prospectus
from documents filed with securities commissions or similar
authorities in Canada and with the United States Securities and
Exchange Commission. Copies of the documents incorporated
herein by reference may be obtained on request without charge from
the secretary of Organigram Holdings Inc. at 35 English Drive,
Moncton, New Brunswick, Canada, E1E 3X3, Telephone (855) 961-9420,
and are also available electronically at www.sedar.com. See
"Documents Incorporated by Reference".
SHORT FORM BASE SHELF
PROSPECTUS
|
NEW
ISSUE
|
August 30, 2021
|
ORGANIGRAM HOLDINGS INC.
$500,000,000
Common Shares
Preferred Shares
Debt
Securities
Subscription Receipts
Warrants
Units
Organigram Holdings Inc. (the
"Corporation", "we", "our" or "us") may
from time to time offer and issue the following securities: (a)
common shares in the capital of the Corporation ("Common
Shares"); (b) preferred shares in the capital of the
Corporation ("Preferred Shares"), (c) debentures, notes or
other evidence of indebtedness of any kind, nature or description
and which may be issuable in series (collectively, "Debt
Securities"); (d) subscription receipts of the Corporation
exchangeable for Common Shares and/or other securities of the
Corporation ("Subscription Receipts"); (e) warrants
exercisable to acquire Common Shares and/or other securities of the
Corporation ("Warrants"); and (f) securities comprised of
more than one of Common Shares, Preferred Shares, Debt Securities,
Subscription Receipts and/or Warrants offered together as a unit
("Units"), or any combination thereof, up to an aggregate
offering price of $500,000,000 (or the equivalent thereof, at the
date of issue, in any other currency or currencies, as the case may
be) at any time during the 25-month period that this short form
base shelf prospectus (including any amendments hereto, the
"Prospectus") remains valid. The Common Shares, Preferred
Shares, Debt Securities, Subscription Receipts, Warrants and Units
(collectively, the "Securities", and each, a
"Security") offered hereby may be offered separately or
together, in separate series, in amounts, at prices and on terms to
be set forth in one or more prospectus supplements (collectively or
individually, as the case may be, "Prospectus
Supplements").
All shelf information permitted
under applicable securities legislation to be omitted from this
Prospectus including, without limitation, the information disclosed
in the specific terms of any offering of Securities, as discussed
above, will be contained in one or more Prospectus Supplements that
will be delivered to purchasers together with this Prospectus,
except in cases where an exemption from such delivery requirements
has been obtained. Each Prospectus Supplement will be incorporated
by reference into this Prospectus for the purposes of securities
legislation as of the date of such Prospectus Supplement and only
for the purposes of the distribution of the Securities to which
that Prospectus Supplement pertains.
The Corporation is a Canadian
issuer that is permitted, under a multijurisdictional disclosure
system (the "MJDS") adopted by the securities regulatory
authorities in Canada and the United States, to prepare this
Prospectus and any Prospectus Supplement in accordance with
Canadian disclosure requirements. Prospective investors should be
aware that such requirements are different from those of the United
States. Financial statements included or incorporated by reference
herein have been prepared in accordance with International
Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board ("IASB") and may not be
comparable to financial statements of United States companies
prepared in accordance with US generally accepted accounting
principles.
The enforcement by investors of
civil liabilities under United States federal securities laws may
be affected adversely because the Corporation is a corporation
existing under the laws of Canada. The Corporation exists under the
laws of Canada, and all of its executive offices, administrative
activities and assets are located outside the United States. In
addition, most of the directors and officers of the Corporation are
residents of jurisdictions other than the United States and all or
a substantial portion of the assets of those persons are or may be
located outside the United States. See "Enforceability of
Civil Liabilities".
THESE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE OR CANADIAN
SECURITIES COMMISSION OR REGULATORY AUTHORITY NOR HAS THE SEC OR
ANY STATE OR CANADIAN SECURITIES COMMISSION OR REGULATORY AUTHORITY
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
You should be aware that the
acquisition of the Securities described herein may have tax
consequences both in the United States and in Canada. Such tax
consequences for investors who are residents in, or citizens of,
the United States may not be described fully herein or in any
applicable Prospectus Supplement. You should read the tax
discussion in any applicable Prospectus Supplement; however, this
Prospectus or any applicable Prospectus Supplement may not fully
describe these tax consequences, and you should consult your tax
advisor prior to making any investment in the Securities.
The specific terms of any offering
of Securities will be set forth in the applicable Prospectus
Supplement and may include, without limitation, where applicable:
(a) in the case of Common Shares, the number of Common Shares being
offered, the currency (which may be Canadian dollars or any other
currency), the offering price (in the event the offering is a fixed
price distribution) or the manner of determining the offering
price(s) (in the event the offering is not a fixed price
distribution) and any other specific terms; (b) in the case of
Preferred Shares, the designation of the particular series, the
number of Preferred Shares being offered, the currency (which may
be Canadian dollars or any other currency), the offering price (in
the event the offering is a fixed price distribution) or the manner
of determining the offering price(s) (in the event the offering is
not a fixed price distribution), any voting rights, any rights to
receive dividends, any terms of redemption, any conversion or
exchange rights and any other specific terms of the Preferred
Shares; (c) in the case of Debt Securities, the specific
designation, aggregate principal amount, the currency or the
currency unit for which the Debt Securities may be purchased (which
may be Canadian dollars or any other currency), maturity, interest
provisions, authorized denominations, offering price, covenants,
events of default, any terms for redemption at the option of the
Corporation or the holder, any exchange or conversion terms and any
other specific terms; (d) in the case of Subscription Receipts, the
number of Subscription Receipts being offered, the currency (which
may be Canadian dollars or any other currency), the offering price,
the terms, conditions and procedures for the exchange of the
Subscription Receipts into or for Common Shares and/or other
securities of the Corporation and any other specific terms; (e) in
the case of Warrants, the number of such Warrants offered, the
currency (which may be Canadian dollars or any other currency), the
offering price, the terms, conditions and procedures for the
exercise of such Warrants into or for Common Shares and/or other
securities of the Corporation and any other specific terms; and (f)
in the case of Units, the number of Units being offered, the
currency (which may be Canadian dollars or any other currency), the
offering price, the terms of the Common Shares, Debt Securities,
Subscription Receipts and/or Warrants, as the case may be,
underlying the Units, and any other specific terms. A Prospectus
Supplement relating to a particular offering of Securities may
include terms pertaining to the Securities being offered thereunder
that are not within the terms and parameters described in this
Prospectus. Where required by statute, regulation or policy, and
where the Securities are offered in currencies other than Canadian
dollars, appropriate disclosure of foreign exchange rates
applicable to the Securities will be included in the Prospectus
Supplement describing the Securities.
We may sell the Securities to or
through one or more underwriters or dealers purchasing as
principals and may also sell the Securities to one or more
purchasers directly, through applicable statutory exemptions, or
through one or more agents designated by us from time to time. The
Securities may be sold from time to time in one or more
transactions at fixed prices or not at fixed prices, such as market
prices prevailing at the time of sale, prices related to such
prevailing market prices or prices to be negotiated with
purchasers, which prices may vary as between purchasers and during
the period of distribution of the Securities. The Prospectus
Supplement relating to a particular offering of Securities will
identify each underwriter, dealer or agent engaged in connection
with the offering and sale of such Securities, as well as the
method of distribution and the terms of the offering of such
Securities, including the initial offering price (in the event the
offering is a fixed price distribution), the manner of determining
the offering price(s) (in the event the offering is not a fixed
price distribution), the net proceeds to us and, to the extent
applicable, any fees, discounts or any other compensation payable
to underwriters, dealers or agents and any other material terms.
See "Plan of Distribution".
This Prospectus may qualify an
"at-the-market distribution" (as defined under applicable Canadian
securities legislation).
In connection with any offering of
the Securities other than an "at-the-market distribution" (as
defined under applicable Canadian legislation) (unless otherwise
specified in the relevant Prospectus Supplement), the underwriters
or agents may over-allot or effect transactions that stabilize or
maintain the market price of the offered Securities at a level
above that which might otherwise prevail on the open market. Such
transactions, if commenced, may be interrupted or discontinued at
any time. See "Plan of Distribution". No underwriter or
dealer involved in an "at-the-market distribution" under this
Prospectus, no affiliate of such an underwriter or dealer and no
person or company acting jointly or in concert with such
underwriter or dealer will over-allot securities in connection with
such distribution or effect any other transactions that are
intended to stabilize or maintain the market price of the
Securities.
The outstanding Common Shares are
listed and posted for trading on the Toronto Stock Exchange (the
"TSX") and the Nasdaq Global Select Market (the
"NASDAQ") under the symbol "OGI". On August 27, 2021,
the last trading day prior to the date of this Prospectus, the
closing price of the outstanding Common Shares on the TSX and
NASDAQ was $3.30 and US$2.63, respectively.
Owning the Securities may
subject you to tax consequences. This Prospectus and any applicable
Prospectus Supplement may not describe the tax consequences fully.
You should read the tax discussion in any applicable Prospectus
Supplement and consult with your own tax advisor with respect to
your own particular circumstances.
Unless otherwise specified in
the applicable Prospectus Supplement, the Preferred Shares, the
Debt Securities, Subscription Receipts, Warrants and Units will not
be listed on any securities exchange. There is no market through
which these securities may be sold and purchasers may not be able
to resell such securities purchased under this Prospectus. This may
affect the pricing of such securities in the secondary market, the
transparency and availability of trading prices, the liquidity of
such securities, and the extent of issuer regulation. See
"Forward-Looking Statements" and
"Risk Factors".
The Corporation is continued under
the Canada Business Corporations Act ("CBCA")
and its head and registered office is at 35 English Drive, Moncton,
New Brunswick, Canada, E1E 3X3.
No underwriter, agent or dealer
has been involved in the preparation of this Prospectus or
performed any review of the contents of this Prospectus.
Any investment in Securities
involves significant risks that should be carefully considered by
prospective investors before purchasing Securities. The risks
outlined in this Prospectus and in the documents incorporated by
reference herein, including the applicable Prospectus Supplement,
should be carefully reviewed and considered by prospective
investors in connection with any investment in Securities. See
"Risk Factors".
TABLE OF CONTENTS
IMPORTANT INFORMATION ABOUT THIS
PROSPECTUS
We have not authorized any person
to provide different information. The Securities may be sold only
in those jurisdictions where offers and sales are permitted. This
Prospectus is not an offer to sell or a solicitation of an offer to
buy the Securities in any jurisdiction where it is unlawful. The
information contained in this Prospectus is accurate only as of the
date of this Prospectus or the date of the document incorporated by
reference herein, as applicable, regardless of the time of delivery
of this Prospectus or of any sale of the Securities. Our business,
financial condition, results of operations and prospects may have
changed since the date of this Prospectus.
Unless the context otherwise
permits, indicates or requires, all references in this Prospectus
to the "Corporation", "we", "our", "us" and similar expressions are
references to Organigram Holdings Inc. and the business carried on
by it.
FINANCIAL INFORMATION
Financial statements included or
incorporated by reference herein have been prepared in accordance
with IFRS as issued by the IASB, which differs from U.S. generally
accepted accounting principles ("U.S. GAAP"), and may not be
comparable to financial statements of United States companies
prepared in accordance with U.S. GAAP.
CURRENCY PRESENTATION AND
EXCHANGE RATE INFORMATION
Unless otherwise noted herein and
in the documents incorporated by reference, all dollar amounts
refer to lawful currency of Canada. All references to "US$" or
"U.S. dollars" are to the currency of the United States.
The following table sets forth, for
the periods indicated, the high, low, average and period-end
indicative rates of exchange for United States dollars expressed in
Canadian dollars, as provided by the Bank of Canada.
|
|
Quarter Ended
May 31, 2021
|
Fiscal Year Ended
August 31, 2020
|
Fiscal Year Ended
August 31, 2019
|
Fiscal Year Ended
August 31, 2018
|
|
Low
|
1.2051
|
1.2970
|
1.2803
|
1.2128
|
|
High
|
1.2668
|
1.4496
|
1.3642
|
1.3310
|
|
Average
|
1.2408
|
1.3458
|
1.3255
|
1.2777
|
|
End
|
1.2072
|
1.3042
|
1.3295
|
1.3055
|
On August 27, 2021, the daily
average rate of exchange posted by the Bank of Canada for
conversion of U.S. dollars into Canadian dollars was US$1.00 =
$1.2635.
FORWARD-LOOKING
STATEMENTS
This Prospectus, including the
documents incorporated by reference herein, contains
"forward-looking information" as defined under Canadian securities
laws (collectively, "forward-looking statements"). All
statements other than statements of historical fact contained in
this Prospectus, or in the documents incorporated by reference
herein, are forward-looking statements, including, without
limitation, the Corporation's statements regarding the
Corporation's business and the environment in which it operates,
the intention of the Corporation to complete any offering of
Securities on the terms and conditions described herein and in any
Prospectus Supplement, the listing of any Securities, and the
intention of the Corporation to use the MJDS to offer Securities in
the United States. In certain cases, forward-looking statements can
be identified by the use of words such as "plans", "expects",
"budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates", "projects" or "believes", "pro forma" or variations
of such words and phrases or state that certain actions, events or
results "may", "could", "would", "might" or "will", "occur" or "be
achieved" and similar words or the negative thereof. Although
management of the Corporation believes that the expectations
represented in such forward-looking statements are reasonable,
there can be no assurance that such expectations will prove to be
correct.
The forward-looking statements in
this Prospectus are based on certain assumptions, including
assumptions regarding present and future business strategies and
the environment in which the Corporation will operate in the
future, including expected revenues from certain contracts, and
ability to achieve goals. They are not guarantees of future
performance and involve risks and uncertainties that are difficult
to control or predict. A number of factors could cause actual
results to differ materially from the results discussed in the
forward-looking statements, including, but not limited to, the
factors discussed under the heading "Risk Factors" in this
Prospectus and in the Corporation's Annual Information Form (as
defined herein) available on the System for Electronic Document
Analysis and Retrieval ("SEDAR") at www.sedar.com and on the
United States Securities and Exchange Commission ("SEC")
website at http://www.sec.gov.
There can be no assurance that
forward-looking statements will prove to be accurate as actual
outcomes and results may differ materially from those expressed in
these forward-looking statements. Readers, therefore, should not
place undue reliance on any such forward-looking statements.
Further, these forward-looking statements are made as of the date
of this Prospectus and, except as expressly required by applicable
law, the Corporation assumes no obligation to publicly update or
revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
ADDITIONAL INFORMATION
We have filed with the SEC pursuant
to MJDS a registration statement on Form F-10 under the United
States Securities Act of 1933, as amended (the "U.S. Securities
Act"), relating to the Securities. This Prospectus, including
the documents incorporated by reference into this Prospectus, which
forms a part of the registration statement, does not contain all of
the information contained in the registration statement, certain
items of which are contained in the exhibits to the registration
statement as permitted by the rules and regulations of the SEC. See
"Documents Filed as Part of the Registration Statement".
Statements included or incorporated by reference in this Prospectus
about the contents of any contract, agreement or other documents
referred to are not necessarily complete, and in each instance, you
should refer to the exhibits for a complete description of the
matter involved. Each such statement is qualified in its entirety
by such reference. Each time we sell Securities under the
registration statement, we will provide a Prospectus Supplement
that will contain specific information about the terms of that
offering. The Prospectus Supplement may also add, update or change
information contained in this Prospectus.
The Corporation's Common Shares are
registered under Section 12(b) of the United States Securities
Exchange Act of 1934, as amended (the "U.S. Exchange Act")
and accordingly, we are subject to informational requirements of
the U.S. Exchange Act and applicable Canadian requirements. In
accordance with these informational requirements, we file reports
and other information with the SEC and with securities regulatory
authorities in Canada. Under the MJDS adopted by the United States
and Canada, documents and other information that we file with the
SEC may be prepared in accordance with the disclosure requirements
of Canada, which are different from those of the United States. As
a foreign private issuer, we are exempt from the rules under the
U.S. Exchange Act prescribing the furnishing and content of proxy
statements, and our officers, directors and principal shareholders
are exempt from the reporting and short-swing profit recovery
provisions contained in Section 16 of the U.S. Exchange Act.
Reports and other information filed by us with, or furnished to,
the SEC may be accessed on the SEC's website at www.sec.gov. You
may read and download any public document that we have filed with
the securities commission or similar regulatory authority in each
of the provinces and territories of Canada, on SEDAR at
www.sedar.com.
ENFORCEABILITY OF CIVIL
LIABILITIES
The Corporation exists under the
laws of Canada, and all of its executive offices, administrative
activities and assets are located outside the United States. In
addition, most of the directors and officers of the Corporation are
residents of jurisdictions other than the United States and all or
a substantial portion of the assets of those persons are or may be
located outside the United States.
As a result, investors who reside
in the United States may have difficulty serving legal process in
the United States upon the Corporation or its directors or
officers, as applicable, or enforcing judgments obtained in United
States courts against any of them or the assets of any of them
located outside the United States, or enforcing against them in the
appropriate Canadian court judgments obtained in United States
courts, including, but not limited to, judgments predicated upon
the civil liability provisions of the federal securities laws of
the United States, or bringing an original action in the
appropriate Canadian courts to enforce liabilities against the
Corporation or any of its directors or officers, as applicable,
based upon United States federal securities laws.
In the United States, the
Corporation has filed with the SEC, concurrently with the filing of
its registration statement on Form F-10, an appointment of agent
for service of process on Form F-X. Under such Form F-X, the
Corporation has appointed Corporation Service Company of1090
Vermont Avenue N.W., Washington, D.C., 20005, U.S.A., as its agent
for service of process in the United States in connection with any
investigation or administrative proceeding conducted by the SEC,
and any civil suit or action brought against the Corporation in a
U.S. court arising out of or related to or concerning the offering
of the Securities under the registration statement.
DOCUMENTS INCORPORATED BY
REFERENCE
Information has been
incorporated by reference in this Prospectus from documents filed
with securities commissions or similar regulatory authorities in
each of the provinces and territories of Canada. Copies of
these documents may be obtained on request without charge from the
Corporate Secretary of the Corporation at 35 English Drive,
Moncton, New Brunswick, Canada, E1E 3X3, Attention: Corporate
Secretary (telephone (855) 961-9420), and are also available
electronically under the Corporation's SEDAR profile at
www.sedar.com and on the SEC's website at http://www.sec.gov.
Except to the extent that their
contents are modified or superseded by a statement contained in
this Prospectus or in any other subsequently filed document that is
also incorporated by reference in this Prospectus, the following
documents of the Corporation filed with the securities commissions
or similar regulatory authorities in each of the provinces and
territories of Canada are specifically incorporated by reference
into, and form an integral part of, this Prospectus:
(a) the
annual information form of the Corporation dated November 29, 2020
for the year ended August 31, 2020 (the "Annual Information
Form");
(b) the
audited consolidated financial statements of the Corporation dated
November 29, 2020 for the years ended August 31, 2020 and 2019,
together with the notes thereto and the report of the independent
registered public accounting firm thereon;
(c) the
management's discussion and analysis of financial condition and
results of operations of the Corporation for the years ended August
31, 2020 and August 31, 2019;
(d) the
unaudited condensed consolidated interim financial statements and
accompanying notes for the three and nine months ended May 31, 2021
and May 31, 2020;
(e) the
interim management discussion and analysis of the financial
condition and results of operations of the Corporation for the
three and nine months ended May 31, 2021 and May 31, 2020;
(f) the
management information circular of the Corporation dated January
18, 2021 regarding the annual meeting of shareholders of the
Corporation held on February 23, 2021;
(g) the
material change report dated November 12, 2020 in respect of the
closing of the Corporation's underwritten public offering of units
for gross proceeds of approximately $69 million;
(h) the
material change report dated November 30, 2020 in respect of the
amendment and restatement of the Corporation's credit facility with
the Bank of Montreal;
(i) the
material change report dated March 19, 2021 in respect of the
strategic investment from a wholly-owned subsidiary of BAT for
total proceeds of approximately $221 million;
(j) the
material change report dated April 14, 2021 relating to the
acquisition of The Edibles & Infusions Corporation
("EIC") for consideration of $22.0 million, plus up to an
additional $13.0 million in shares of the Corporation payable upon
EIC achieving certain earnout milestones (each, a
"Milestone");
(k) the
material change report dated May 7, 2021 relating to the stepping
down of Greg Engel, the Corporation's former Chief Executive
Officer; and
(l) the
material change report dated August 6, 2021 relating to the
appointment of Beena Goldenberg as Chief Executive Officer of the
Corporation.
Any documents of the type described
in Item 11.1 of Form 44-101F1 - Short Form Prospectus
Distributions which are filed by the Corporation with the
securities commissions or similar authorities in the provinces and
territories of Canada subsequent to the date of this Prospectus and
prior to the termination of this distribution shall be deemed to be
incorporated by reference in this Prospectus. Documents referenced
in any of the documents incorporated by reference in this
Prospectus but not expressly incorporated by reference therein or
herein and not otherwise required to be incorporated by reference
therein or herein are not incorporated by reference in this
Prospectus.
Upon a new annual information form
and annual consolidated financial statements and the accompanying
management's discussion and analysis being filed by the Corporation
with the applicable Canadian securities commissions or similar
regulatory authorities in Canada during the period that this
Prospectus is effective, the previous annual information form, the
previous annual consolidated financial statements and all interim
consolidated financial statements and in each case the accompanying
management's discussion and analysis, and material change reports,
filed prior to the commencement of the financial year of the
Corporation in which the new annual information form is filed shall
be deemed to no longer be incorporated into this Prospectus for
purpose of future offers and sales of Securities under this
Prospectus. Upon interim consolidated financial statements and the
accompanying management's discussion and analysis being filed by
the Corporation with the applicable Canadian securities commissions
or similar regulatory authorities during the period that this
Prospectus is effective, all interim consolidated financial
statements and the accompanying management's discussion and
analysis filed prior to such new interim consolidated financial
statements and management's discussion and analysis shall be deemed
to no longer be incorporated into this Prospectus for purposes of
future offers and sales of Securities under this Prospectus. In
addition, upon a new management information circular for an annual
meeting of shareholders being filed by the Corporation with the
applicable Canadian securities commissions or similar regulatory
authorities during the period that this Prospectus is effective,
the previous management information circular filed in respect of
the prior annual meeting of shareholders shall no longer be deemed
to be incorporated into this Prospectus for purposes of future
offers and sales of Securities under this Prospectus.
In addition, to the extent that
any document or information incorporated by reference into this
Prospectus is included in any report on Form 6-K, Form 40-F or Form
20-F (or any respective successor form) that is filed with or
furnished to the SEC after the date of this Prospectus, such
document or information shall be deemed to be incorporated by
reference as an exhibit to the registration statement on Form F-10
of which this Prospectus forms a part. In addition, the Corporation
may incorporate by reference into this Prospectus, or the
registration statement on Form F-10 of which it forms a part, other
information from documents that the Corporation will file with or
furnish to the SEC pursuant to Section 13(a) or 15(d) of the U.S.
Exchange Act, if and to the extent expressly provided
therein.
A Prospectus Supplement containing
the specific variable terms in respect of an offering of the
Securities will be delivered to purchasers of such Securities
together with this Prospectus, unless an exemption from the
prospectus delivery requirements has been granted or is otherwise
available, and will be deemed to be incorporated by reference into
this Prospectus as of the date of such Prospectus Supplement only
for the purposes of the offering of the Securities covered by such
Prospectus Supplement.
Notwithstanding anything herein
to the contrary, any statement contained in this Prospectus or in a
document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded, for the
purposes of this Prospectus, to the extent that a statement
contained herein or in any other subsequently filed document which
also is, or is deemed to be, incorporated by reference herein
modifies or supersedes such statement. The modifying or superseding
statement need not state that it has modified or superseded a prior
statement or include any other information set forth in the
document or statement which it modifies or supersedes. The making
of such a modifying or superseding statement shall not be deemed an
admission for any purposes that the modified or superseded
statement, when made, constituted a misrepresentation, an untrue
statement of a material fact or an omission to state a material
fact that is required to be stated or that is necessary to make a
statement not misleading in light of the circumstances in which it
was made.
THE CORPORATION
The Corporation was incorporated
under the Business Corporations Act (British Columbia) (the
"BCBCA") on July 5, 2010 as Inform Resources Corp. and
changed its name to Inform Exploration Corp. ("Inform") on
February 16, 2011. On November 21, 2011, Inform completed its
initial public offering and its Common Shares commenced trading on
the TSX-V on November 24, 2011. At that time, Inform was engaged in
the acquisition, exploration and development of natural resource
properties. Inform subsequently ceased all resource exploration
activity. In August 2014, pursuant to a reverse takeover
transaction in accordance with Policy 5.2 of the TSX-V, Inform
acquired all of the issued and outstanding shares of Organigram
Inc. (the "RTO Transaction"). On or about the time of
closing the RTO Transaction, Inform changed its name to Organigram
Holdings Inc. On April 6, 2016, Organigram Holdings Inc. was
continued from the BCBCA to the CBCA. The Corporation's Common
Shares started trading on the Nasdaq Global Select Market on May
21, 2019. On August 20, 2019, the Corporation graduated from the
TSX-V and received approval to trade on the TSX under the symbol
"OGI".
The Corporation's wholly-owned
subsidiary Organigram Inc. is a licensed producer of cannabis and
cannabis derived products (a "Licensed Producer") under the
Cannabis Act (Canada) and the Cannabis Regulations
(Canada) (together, the "Cannabis Act") and regulated by
Health Canada. The Corporation's wholly-owned subsidiary EIC holds
a research license and a standard processing licence under the
Cannabis Act.
The Company conducts its operations
at its facility located in Moncton, New Brunswick. Patients order
medical cannabis dried flower and cannabis derivative products from
the Corporation primarily through the Corporation's online store or
by phone. Medical cannabis dried flower and cannabis derivative
products are and will continue to be delivered by secured courier
or other methods permitted by the Cannabis Act. The Corporation's
prices vary based on grow time, strain yield and market
conditions.
The Corporation is also authorized
for wholesale shipping of cannabis plant cuttings, dried flower,
blends, pre-rolls and cannabis derivative based products to
approved retailers and wholesalers for adult-use recreational
cannabis under the individual provincial and territorial
regulations as per the Cannabis Act.
RECENT DEVELOPMENTS
Other than as set out below, there
have been no material developments in the business of the
Corporation since May 31, 2021, the date of the Corporation's most
recent interim financial statements, which have not been disclosed
in this Prospectus or the documents incorporated by reference
herein.
Management Changes
On August 4, 2021, the Corporation
announced that it has appointed Beena Goldenberg as the
Corporation's new Chief Executive Officer. Ms. Goldenberg will
assume the role effective September 9, 2021.
Cannabis Innovators
Panel
On July 15, 2021, the Corporation
announced the launch of the Cannabis Innovators Panel (the
"Panel"), a cannabis consumer panel offering real-time
insights into consumer preferences, usage occasions, and future
development opportunities. The Panel will contribute feedback on
both existing product categories as well as guide areas of future
research and development including flower, vapes, concentrates,
edibles, flower and pre-rolls.
Product Launches
On August 25, 2021, the Corporation
announced the launch of SHRED'ems, a high quality and bold
flavoured lineup of cannabis-infused gummies. SHRED'ems is an
extension of the Corporation's highly popular, value-priced SHRED
product portfolio which includes SHRED milled flower and SHRED Jar
of Joints. The launch of SHRED'ems and the first listing in certain
provinces marks the achievement of the first Milestone resulting in
an additional $3.5 million in Common Shares being payable to the
EIC vendors under the terms of the share purchase agreement for EIC
and subject to the terms and conditions thereof.
On August 17, 2021, the Corporation
announced that the launch of Edison Cannabis Co. ("Edison")
JOLTS, Canada's first high potency THC lozenge. Edison JOLTS are
available in a package of 10 mint flavoured lozenges with 10mg of
THC per lozenge for a total of 100mg per pack.
Recruitment
On June 3, 2021, the Corporation
announced that it is currently recruiting for as many as 75
positions across most functional areas of the Corporation.
CONSOLIDATED
CAPITALIZATION
Since May 31, 2021, the date of the
Corporation's most recently filed financial statements, there have
been no material changes to the Corporation's share and loan
capitalization on a consolidated basis. The applicable Prospectus
Supplement will describe any material change, and the effect of
such material change, on the share and loan capitalization of the
Corporation that will result from the issuance of Securities
pursuant to such Prospectus Supplement.
USE OF PROCEEDS
The use of proceeds from the issue
and sale of specific Securities pursuant to this Prospectus will be
described in the Prospectus Supplement relating to the issuance and
sale of such Securities.
DESCRIPTION OF SECURITIES
The following is a brief summary of
certain general terms and provisions of the Securities as at the
date of this Prospectus. The summary does not purport to be
complete and is indicative only. The specific terms of any
Securities to be offered under this Prospectus, and the extent to
which the general terms described in this Prospectus apply to such
Securities, will be set forth in the applicable Prospectus
Supplement. Moreover, a Prospectus Supplement relating to a
particular offering of Securities may include terms pertaining to
the Securities being offered thereunder that are not within the
terms and parameters described in this Prospectus. The Securities
will not include any novel derivatives or asset-backed securities
as discussed under Part 4 of National Instrument 44-102 - Shelf
Distributions.
Common Shares
Each Common Share entitles the
holder thereof to receive notice of any meetings of shareholders of
the Corporation, to attend and to cast one vote at all such
meetings. Holders of Common Shares do not have cumulative voting
rights with respect to the election of directors and, accordingly,
holders of a majority of the Common Shares entitled to vote in any
election of directors may elect all directors standing for
election. The holders of Common Shares are entitled to receive if,
as and when declared by the Board, dividends in such amounts as
shall be determined by the Board in its discretion. The holders of
Common Shares have the right to receive the Corporation's remaining
property and assets after payment of debts and other liabilities on
a pro rata basis in the event of a liquidation, dissolution or
winding-up, whether voluntary or involuntary. The Common Shares do
not carry any pre-emptive, subscription, redemption or conversion
rights, nor do they contain any sinking or purchase fund
provisions.
The aggregate number of Common
Shares which may be issued is unlimited and, as of August 27, 2021,
the last trading day prior to the date of this Prospectus, there
are 298,782,723 Common Shares outstanding.
Preferred Shares
Preferred Shares may be issued in
one or more series pursuant to amendments to the articles of
continuance of the Corporation as described in the Prospectus
Supplement. Preferred Shares may be offered separately or together
with other Securities, as the case may be. The applicable
Prospectus Supplement will include details of the articles of
amendment authorizing the issuance of the series of Preferred
Shares being offered. A copy of any articles of amendment relating
to an offering of Preferred Shares will be filed by the Corporation
with the relevant securities regulatory authorities in Canada after
it has been filed by the Corporation under the CBCA.
Each applicable Prospectus
Supplement will set forth the terms and other information with
respect to the Preferred Shares being offered thereby, which may
include, without limitation, the following (where applicable):
• the
designation of the series of Preferred Shares offered, and the
maximum number of such series of Preferred Shares that the
Corporation is authorized to issue;
• the
aggregate number of Preferred Shares offered;
• the
price at which the Preferred Shares will be offered;
• the
currency for which the Preferred Shares may be purchased (if other
than Canadian dollars);
• the
annual dividend rate, if any, and whether the dividend rate is
fixed or variable, the date from which dividends will accrue, and
the dividend payment dates;
• the
priority of the Preferred Shares in respect to the payment of
dividends and the distribution of assets in the event of the
liquidation, dissolution or winding-up of the Corporation;
• the
price and the terms and conditions for redemption, if any,
including whether redeemable at the Corporation's option or at the
option of the holder, the time period for redemption, and payment
of any accumulated dividends;
• the
terms and conditions, if any, for conversion or exchange for shares
of any other class of the Corporation or any other series of
Preferred Shares, or any other securities or assets, including the
price or the rate of conversion or exchange and the method, if any,
of adjustment;
• whether
such Preferred Shares will be listed on any securities
exchange;
• the
terms and conditions of any share purchase plan or sinking
fund;
• the
voting rights, if any;
• any
other rights, privileges, restrictions, or conditions;
• certain
material Canadian and United States tax consequences of owning the
Preferred Shares; and
• any
other material terms and conditions of the Preferred Shares.
Debt Securities
The Corporation may issue Debt
Securities in one or more series under an indenture (the
"Indenture"), to be entered into between the Corporation and
a trustee. To the extent applicable, the Indenture will be subject
to and governed by the United States Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). A copy of
the form of the Indenture will be filed with the SEC as an exhibit
to the Registration Statement of which this Prospectus forms a
part. The following description sets forth certain general material
terms and provisions of the Debt Securities. If Debt Securities are
issued, we will describe in the applicable Prospectus Supplement
the particular material terms and provisions of any series of the
Debt Securities and a description of how the general material terms
and provisions described below may apply to that series of the Debt
Securities. Prospective investors should read both the Prospectus
and the Prospectus Supplement for a complete summary of all
material terms relating to a particular series of Debt Securities.
Prospective investors should be aware that information in the
applicable Prospectus Supplement may update, amend and supersede
the following information regarding the general material terms and
provisions of the Debt Securities. Prospective investors also
should refer to the Indenture, as it may be supplemented, for a
complete description of all terms relating to the Debt Securities.
We will file as exhibits to the Registration Statement, of which
this Prospectus is a part, or will incorporate by reference from a
report on Form 6-K that the Corporation furnishes to the SEC, any
supplemental indenture describing the terms and conditions of Debt
Securities that we are offering before the issuance of such Debt
Securities. We will also file the final Indenture for any offering
of Debt Securities on SEDAR.
We may issue Debt Securities and
incur additional indebtedness other than through the offering of
Debt Securities pursuant to this Prospectus.
General
The Indenture will not limit the
aggregate principal amount of Debt Securities that we may issue
under the Indenture and will not limit the amount of other
indebtedness that we may incur. The Indenture will provide that we
may issue Debt Securities from time to time in one or more series
and may be denominated and payable in U.S. dollars, Canadian
dollars or any foreign currency. Unless otherwise indicated in the
applicable Prospectus Supplement, the Debt Securities will be
unsecured obligations of the Corporation. The Indenture will also
permit us to increase the principal amount of any series of the
Debt Securities previously issued and to issue that increased
principal amount.
The applicable Prospectus
Supplement for any series of Debt Securities that we offer will
describe the specific terms of the Debt Securities and may include,
but is not limited to, any of the following:
• the
title of the Debt Securities;
• any
limit on the aggregate principal amount of the Debt Securities and,
if no limit is specified, the Corporation will have the right to
re-open such series for the issuance of additional Debt Securities
from time to time;
• the
extent and manner, if any, to which payment on or in respect of the
Debt Securities of the series will be senior or will be
subordinated to the prior payment of other liabilities and
obligations;
• whether
payment of the Debt Securities will be guaranteed by any other
person;
• whether
or not the Debt Securities will be secured or unsecured, and the
terms of any secured debt including a general description of the
collateral and of the material terms of any related security,
pledge or other agreement;
• the
date or dates, or the method by which such date or dates will be
determined or extended, on which the principal (and premium, if
any) of the Debt Securities of the series is payable;
• the
rate or rates at which the Securities of the series shall bear
interest, if any, or the method by which such rate or rates shall
be determined, whether such interest shall be payable in cash or
additional Securities of the same series or shall accrue and
increase the aggregate principal amount outstanding of such series,
the date or dates from which such interest shall accrue, or the
method by which such date or dates shall be determined;
• the
place or places where we will pay principal, premium and interest,
if any, and the place or places where Debt Securities can be
presented for registration of transfer, exchange or conversion;
• whether
and under what circumstances we will be required to pay any
additional amounts for withholding or deduction for taxes with
respect to the Debt Securities, and whether and on what terms we
will have the option to redeem the Debt Securities rather than pay
the additional amounts;
• whether
we will be obligated to redeem, repay or repurchase the Debt
Securities pursuant to any sinking or other provision, or at the
option of a holder and the terms and conditions of such redemption,
repayment or repurchase;
• whether
we may redeem the Debt Securities, in whole or in part, prior to
maturity and the terms and conditions of any such redemption;
• the
denominations in which we will issue any registered Debt
Securities, if other than denominations of $2,000 and any multiple
of $1,000 and, if other than denominations of $5,000, the
denominations in which any unregistered Debt Security shall be
issuable;
• whether
we will make payments on the Debt Securities in a currency other
than U.S. dollars;
• whether
payments on the Debt Securities will be payable with reference to
any index, formula or other method;
• whether
we will issue the Debt Securities as global securities and, if so,
the identity of the depositary for the global securities;
• whether
we will issue the Debt Securities as unregistered securities,
registered securities or both;
• any
changes or additions to, or deletions of, events of default or
covenants whether or not such events of default or covenants are
consistent with the events of default or covenants in the
Indenture;
• the
applicability of, and any changes or additions to, the provisions
for defeasance described under "Defeasance" below;
• whether
the holders of any series of Debt Securities have special rights if
specified events occur;
• the
terms, if any, for any conversion or exchange of the Debt
Securities for any other securities of the Corporation;
• provisions
as to modification, amendment or variation of any rights or terms
attaching to the Debt Securities; and
• any
other terms, conditions, rights and preferences (or limitations on
such rights and preferences).
Unless stated otherwise in the
applicable Prospectus Supplement, no holder of Debt Securities will
have the right to require us to repurchase the Debt Securities and
there will be no increase in the interest rate if we become
involved in a highly leveraged transaction or if we have a change
of control.
We may issue Debt Securities
bearing no interest or interest at a rate below the prevailing
market rate at the time of issuance, and we may offer and sell the
Debt Securities at a discount below their stated principal amount.
We may also sell any of the Debt Securities for a foreign currency
or currency unit, and payments on the Debt Securities may be
payable in a foreign currency or currency unit. In any of these
cases, we will describe certain Canadian federal and U.S. federal
income tax consequences and other special considerations in the
applicable Prospectus Supplement.
We may issue Debt Securities with
terms different from those of Debt Securities previously issued
and, without the consent of the holders thereof, we may reopen a
previous issue of a series of Debt Securities and issue additional
Debt Securities of such series (unless the reopening was restricted
when such series was created).
Guarantees
Our payment obligations under any
series of Debt Securities may be guaranteed by certain of our
direct or indirect subsidiaries. In order to comply with certain
registration statement form requirements under U.S. law, these
guarantees may in turn be guaranteed by the Corporation. The terms
of such guarantees will be set forth in the applicable Prospectus
Supplement.
Ranking and Other
Indebtedness
Unless otherwise indicated in an
applicable Prospectus Supplement, and except to the extent
prescribed by law, each series of Debt Securities shall be senior,
unsubordinated and unsecured obligations of the Corporation and
shall rank pari passu and ratably without preference among
themselves and pari passu with all other senior, unsubordinated and
unsecured obligations of the Corporation.
Our Board may establish the extent
and manner, if any, to which payment on or in respect of a series
of Debt Securities will be senior, senior subordinated or
subordinated to the prior payment of the Corporation's other
liabilities and obligations, and whether the payment of principal,
premium, if any, and interest, if any, will be guaranteed by any
other person and the nature and priority of any security.
Debt Securities in Global
Form
The Depositary and
Book-Entry
Unless otherwise specified in the
applicable Prospectus Supplement, a series of the Debt Securities
may be issued in whole or in part in global form as a "global
security" and will be registered in the name of or issued in bearer
form and be deposited with a depositary, or its nominee, each of
which will be identified in the applicable Prospectus Supplement
relating to that series. Unless and until exchanged, in whole or in
part, for the Debt Securities in definitive registered form, a
global security may not be transferred except as a whole by the
depositary for such global security to a nominee of the depositary,
by a nominee of the depositary to the depositary or another nominee
of the depositary or by the depositary or any such nominee to a
successor of the depositary or a nominee of the successor.
The specific terms of the
depositary arrangement with respect to any portion of a particular
series of the Debt Securities to be represented by a global
security will be described in the applicable Prospectus Supplement
relating to such series. The Corporation anticipates that the
provisions described in this section will apply to all depositary
arrangements.
Upon the issuance of a global
security, the depositary therefor or its nominee will credit, on
its book entry and registration system, the respective principal
amounts of the Debt Securities represented by the global security
to the accounts of such persons, designated as "participants",
having accounts with such depositary or its nominee. Such accounts
shall be designated by the underwriters, dealers or agents
participating in the distribution of the Debt Securities or by the
Corporation if such Debt Securities are offered and sold directly
by the Corporation. Ownership of beneficial interests in a global
security will be limited to participants or persons that may hold
beneficial interests through participants. Ownership of beneficial
interests in a global security will be shown on, and the transfer
of that ownership will be effected only through, records maintained
by the depositary therefor or its nominee (with respect to
interests of participants) or by participants or persons that hold
through participants (with respect to interests of persons other
than participants). The laws of some states in the United States
may require that certain purchasers of securities take physical
delivery of such securities in definitive form.
So long as the depositary for a
global security or its nominee is the registered owner of the
global security or holder of a global security in bearer form, such
depositary or such nominee, as the case may be, will be considered
the sole owner or holder of the Debt Securities represented by the
global security for all purposes under the Indenture. Except as
provided below, owners of beneficial interests in a global security
will not be entitled to have a series of the Debt Securities
represented by the global security registered in their names, will
not receive or be entitled to receive physical delivery of such
series of the Debt Securities in definitive form and will not be
considered the owners or holders thereof under the Indenture.
Any payments of principal, premium,
if any, and interest, if any, on global securities registered in
the name of a depositary or securities registrar will be made to
the depositary or its nominee, as the case may be, as the
registered owner of the global security representing such Debt
Securities. None of the Corporation, any trustee or any paying
agent for the Debt Securities represented by the global securities
will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial
ownership interests of the global security or for maintaining,
supervising or reviewing any records relating to such beneficial
ownership interests.
The Corporation expects that the
depositary for a global security or its nominee, upon receipt of
any payment of principal, premium, if any, or interest, if any,
will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the
principal amount of the global security as shown on the records of
such depositary or its nominee. The Corporation also expects that
payments by participants to owners of beneficial interests in a
global security held through such participants will be governed by
standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in
"street name", and will be the responsibility of such
participants.
Discontinuance of Depositary's
Services
If a depositary for a global
security representing a particular series of the Debt Securities is
at any time unwilling or unable to continue as depositary or, if at
any time the depositary for such series shall no longer be
registered or in good standing under the U.S. Exchange Act, and a
successor depositary is not appointed by us within 90 days, the
Corporation will issue such series of the Debt Securities in
definitive form in exchange for a global security representing such
series of the Debt Securities. If an event of default under the
Indenture has occurred and is continuing, Debt Securities in
definitive form will be printed and delivered upon written request
by the holder to the appropriate trustee. In addition, the
Corporation may at any time and in the Corporation's sole
discretion determine not to have a series of the Debt Securities
represented by a global security and, in such event, will issue a
series of the Debt Securities in definitive form in exchange for
all of the global securities representing that series of Debt
Securities.
Debt Securities in Definitive
Form
A series of the Debt Securities may
be issued in definitive form, solely as registered securities,
solely as unregistered securities or as both registered securities
and unregistered securities. Registered securities will be issuable
in denominations of $2,000 and integral multiples of $1,000 and
unregistered securities will be issuable in denominations of $5,000
and integral multiples of $5,000 or, in each case, in such other
denominations as may be set out in the terms of the Debt Securities
of any particular series. Unless otherwise indicated in the
applicable Prospectus Supplement, unregistered securities will have
interest coupons attached.
Unless otherwise indicated in the
applicable Prospectus Supplement, payment of principal, premium, if
any, and interest, if any, on the Debt Securities in definitive
form will be made at the office or agency designated by the
Corporation, or at the Corporation's option the Corporation can pay
principal, interest, if any, and premium, if any, by cheque mailed
to the address of the person entitled at the address appearing in
the security register of the trustee or electronic funds wire
transfer to an account of persons who meet certain thresholds set
out in the Indenture who are entitled to receive payments by wire
transfer. Unless otherwise indicated in the applicable Prospectus
Supplement, payment of interest, if any, will be made to the
persons in whose name the Debt Securities are registered at the
close of business on the day or days specified by the
Corporation.
At the option of the holder of Debt
Securities, registered securities of any series will be
exchangeable for other registered securities of the same series, of
any authorized denomination and of a like aggregate principal
amount. If, but only if, provided in an applicable Prospectus
Supplement, unregistered securities (with all unmatured coupons,
except as provided below, and all matured coupons in default) of
any series may be exchanged for registered securities of the same
series, of any authorized denominations and of a like aggregate
principal amount and tenor. In such event, unregistered securities
surrendered in a permitted exchange for registered securities
between a regular record date or a special record date and the
relevant date for payment of interest shall be surrendered without
the coupon relating to such date for payment of interest, and
interest will not be payable on such date for payment of interest
in respect of the registered security issued in exchange for such
unregistered security, but will be payable only to the holder of
such coupon when due in accordance with the terms of the Indenture.
Unless otherwise specified in an applicable Prospectus Supplement,
unregistered securities will not be issued in exchange for
registered securities.
The applicable Prospectus
Supplement may indicate the places to register a transfer of the
Debt Securities in definitive form. Service charges may be payable
by the holder for any registration of transfer or exchange of the
Debt Securities in definitive form, and the Corporation may, in
certain instances, require a sum sufficient to cover any tax or
other governmental charges payable in connection with these
transactions.
We shall not be required to:
• issue,
register the transfer of or exchange any series of the Debt
Securities in definitive form during a period beginning at the
opening of 15 days before any selection of securities of that
series of the Debt Securities to be redeemed and ending on the
relevant date of notice of such redemption, as provided in the
Indenture;
• register
the transfer of or exchange any registered security in definitive
form, or portion thereof, called for redemption, except the
unredeemed portion of any registered security being redeemed in
part;
• exchange
any unregistered security called for redemption except to the
extent that such unregistered security may be exchanged for a
registered security of that series and like tenor; provided that
such registered security will be simultaneously surrendered for
redemption; or
• issue,
register the transfer of or exchange any of the Debt Securities in
definitive form which have been surrendered for repayment at the
option of the holder, except the portion, if any, of such Debt
Securities not to be so repaid.
Provision of Financial
Information
To the extent the Indenture is
governed by the Trust Indenture Act, the Corporation will file with
the Trustee:
(i) copies
of annual reports on Form 20-F or 40-F, as applicable (or any
successor form), containing audited financial statements and the
other financial information required to be contained therein (or
required in such successor form);
(ii) copies
of reports on Form 6-K (or any successor form) containing unaudited
financial statements and the other financial information which are
required to be provided in quarterly reports under the laws of
Canada or any province thereof;
(iii) copies
of annual reports on Form 10-K (or any successor form) and
quarterly reports on Form 10-Q (or any successor form), if the
Corporation ceases to be eligible to use the SEC rules and forms
available to foreign private issuers (as defined in Rule 3b-4 under
the U.S. Exchange Act); and
(iv) copies
of such other information, documents and reports (or copies of such
portions of any of the foregoing as the SEC may from time to time
by rules and regulations prescribe) which the Corporation may be
required to file with or furnish to the SEC pursuant to Section 13
or Section 15(d) of the U.S. Exchange Act;
in
each case within 15 days after such materials have been filed with
or furnished to the SEC.
In the event that the Corporation
ceases to be subject to the reporting requirements of Section 13 or
15(d) of the U.S. Exchange Act at a time the Indenture is governed
by the Trust Indenture Act,
• continue
to file with the SEC annual reports on Form 20-F or 40-F, as
applicable (or any successor form); and
• continue
to furnish to the SEC reports on Form 6-K (or any successor form)
containing unaudited financial statements and the other financial
information which are required to be provided in quarterly reports
under the laws of Canada or any province thereof; or
• file
with the SEC annual reports on Form 10-K (or any successor form)
and quarterly reports on Form 10-Q (or any successor form), if the
Corporation ceases to be eligible to use the SEC rules and forms
available to foreign private issuers (as defined in Rule 3b-4 under
the U.S. Exchange Act);
• in
each case within the period prescribed for filing the Form 20-F,
Form 40-F, Form 10-K or Form 10Q, as applicable, or for furnishing
the Form 6-K to the SEC; and
• file
a copy of such materials with the Trustee within 15 days of their
submission to the SEC.
Events of Default
Unless otherwise specified in the
applicable Prospectus Supplement relating to a particular series of
Debt Securities, the following is a summary of events which will,
with respect to any series of the Debt Securities, constitute an
event of default under the Indenture with respect to the Debt
Securities of that series:
-
the Corporation fails to pay principal of or any premium on any
Debt Security of that series when it is due and payable;
-
the Corporation fails to pay interest payable on any Debt Security
of that series when it becomes due and payable, and such default
continues for 30 days;
-
the Corporation fails to make any required sinking fund or
analogous payment when due for that series of Debt Securities;
-
the Corporation fails to observe or perform any of its covenants or
agreements in the Indenture that affect or are applicable to the
Debt Securities of that series for 90 days after written notice to
the Corporation by the trustees or to the Corporation and the
trustees by holders of at least 25% in aggregate principal amount
of the outstanding Debt Securities of that series;
-
certain events involving the Corporation's bankruptcy, insolvency
or reorganization; and
-
any other event of default provided for in that series of Debt
Securities.
A default under one series of Debt
Securities will not necessarily be a default under another series.
A trustee may withhold notice to the holders of the Debt Securities
of any default, except in the payment of principal or premium, if
any, or interest, if any, if in good faith it considers it in the
interests of the holders to do so and so advises the Corporation in
writing.
If an event of default for any
series of Debt Securities occurs and continues, a trustee or the
holders of at least 25% in aggregate principal amount of the Debt
Securities of that series may require the Corporation to repay
immediately:
-
the entire principal and interest of the Debt Securities of the
series; or
- if
the Debt Securities are discounted securities, that portion of the
principal as is described in the applicable Prospectus
Supplement.
If an event of default relates to
events involving the Corporation's bankruptcy, insolvency or
reorganization, the principal of all Debt Securities will become
immediately due and payable without any action by the trustee or
any holder.
Subject to certain conditions, the
holders of a majority of the aggregate principal amount of the Debt
Securities of the affected series can rescind and annul an
accelerated payment requirement. If Debt Securities are discounted
securities, the applicable Prospectus Supplement will contain
provisions relating to the acceleration of maturity of a portion of
the principal amount of the discounted securities upon the
occurrence or continuance of an event of default.
Other than its duties in case of a
default, a trustee is not obligated to exercise any of the rights
or powers that it will have under the Indenture at the request or
direction of any holders, unless the holders offer the trustee
reasonable security or indemnity. If they provide this reasonable
security or indemnity, the holders of a majority in aggregate
principal amount of any series of Debt Securities may, subject to
certain limitations, direct the time, method and place of
conducting any proceeding for any remedy available to a trustee, or
exercising any trust or power conferred upon a trustee, for any
series of Debt Securities.
The Corporation will be required to
furnish to the trustees a statement annually as to its compliance
with all conditions and covenants under the Indenture and, if the
Corporation is not in compliance, the Corporation must specify any
defaults. The Corporation will also be required to notify the
trustees as soon as practicable upon becoming aware of any event of
default.
No holder of a Debt Security of any
series will have any right to institute any proceeding with respect
to the Indenture, or for the appointment of a receiver or a
trustee, or for any other remedy, unless:
• the
holder has previously given to the trustees written notice of a
continuing event of default with respect to the Debt Securities of
the affected series;
• the
holders of at least 25% in principal amount of the outstanding Debt
Securities of the series affected by an event of default have made
a written request, and the holders have offered reasonable
indemnity, to the trustees to institute a proceeding as trustees;
and
• the
trustees have failed to institute a proceeding, and have not
received from the holders of a majority in aggregate principal
amount of the outstanding Debt Securities of the series affected
(or in the case of bankruptcy, insolvency or reorganization, all
series outstanding) by an event of default a direction inconsistent
with the request, within 60 days after receipt of the holders'
notice, request and offer of indemnity.
However, such above-mentioned
limitations do not apply to a suit instituted by the holder of a
Debt Security for the enforcement of payment of the principal of or
any premium, if any, or interest on such Debt Security on or after
the applicable due date specified in such Debt Security.
Defeasance
When the Corporation uses the term
"defeasance", it means discharge from its obligations with respect
to any Debt Securities of or within a series under the Indenture.
Unless otherwise specified in the applicable Prospectus Supplement,
if the Corporation deposits with a trustee cash, government
securities or a combination thereof sufficient to pay the
principal, interest, if any, premium, if any, and any other sums
due to the stated maturity date or a redemption date of the Debt
Securities of a series, then at the Corporation's option:
• the
Corporation will be discharged from the obligations with respect to
the Debt Securities of that series; or
• the
Corporation will no longer be under any obligation to comply with
certain restrictive covenants under the Indenture and certain
events of default will no longer apply to the Corporation.
If this happens, the holders of the
Debt Securities of the affected series will not be entitled to the
benefits of the Indenture except for registration of transfer and
exchange of Debt Securities and the replacement of lost, stolen,
destroyed or mutilated Debt Securities. These holders may look only
to the deposited fund for payment on their Debt Securities.
To exercise the defeasance option,
the Corporation must deliver to the trustees:
• an
opinion of counsel in the United States to the effect that the
holders of the outstanding Debt Securities of the affected series
will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of a defeasance and will be subject to U.S.
federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if the defeasance had
not occurred;
• an
opinion of counsel in Canada or a ruling from the Canada Revenue
Agency to the effect that the holders of the outstanding Debt
Securities of the affected series will not recognize income, gain
or loss for Canadian federal, provincial or territorial income or
other tax purposes as a result of a defeasance and will be subject
to Canadian federal, provincial or territorial income tax and other
tax on the same amounts, in the same manner and at the same times
as would have been the case had the defeasance not occurred;
and
• a
certificate of one of the Corporation's officers and an opinion of
counsel, each stating that all conditions precedent provided for
relating to defeasance have been complied with.
If the Corporation is to be
discharged from its obligations with respect to the Debt
Securities, and not just from the Corporation's covenants, the U.S.
opinion must be based upon a ruling from or published by the United
States Internal Revenue Service or a change in law to that
effect.
In addition to the delivery of the
opinions described above, the following conditions must be met
before the Corporation may exercise its defeasance option:
• no
event of default or event that, with the passing of time or the
giving of notice, or both, shall constitute an event of default
shall have occurred and be continuing for the Debt Securities of
the affected series;
• the
Corporation is not an "insolvent person" within the meaning of
applicable bankruptcy and insolvency legislation; and
• other
customary conditions precedent are satisfied.
Modification and
Waiver
Modifications and amendments of the
Indenture may be made by the Corporation and the trustees pursuant
to one or more Supplemental Indentures (a "Supplemental
Indenture") with the consent of the holders of at least a
majority in aggregate principal amount of the outstanding Debt
Securities of each series affected by the modification. However,
without the consent of each holder affected, no such modification
may:
• change
the stated maturity of the principal, premium, if any, or any
instalment of interest, if any, on any Debt Security;
• reduce
the principal, premium, if any, or rate of interest, if any, or
change any obligation of the Corporation to pay any additional
amounts;
• reduce
the amount of principal of a debt security payable upon
acceleration of its maturity or the amount provable in
bankruptcy;
• change
the place or currency of any payment;
• affect
the holder's right to require the Corporation to repurchase the
Debt Securities at the holder's option;
• impair
the right of the holders to institute a suit to enforce their
rights to payment;
• adversely
affect any conversion or exchange right related to a series of Debt
Securities;
• reduce
the percentage of Debt Securities required to modify the Indenture
or to waive compliance with certain provisions of the Indenture;
or
• reduce
the percentage in principal amount of outstanding Debt Securities
necessary to take certain actions.
The holders of at least a majority
in principal amount of outstanding Debt Securities of any series
may on behalf of the holders of all Debt Securities of that series
waive, insofar as only that series is concerned, past defaults
under the Indenture and compliance by the Corporation with certain
restrictive provisions of the Indenture. However, these holders may
not waive a default in any payment of principal, premium, if any,
or interest on any Debt Security or compliance with a provision
that cannot be modified without the consent of each holder
affected.
The Corporation may modify the
Indenture pursuant to a Supplemental Indenture without the consent
of any holders of Debt Securities to:
• evidence
its successor under the Indenture;
• add
covenants of the Corporation or surrender any right or power of the
Corporation for the benefit of holders;
• add
events of default;
• provide
for unregistered securities to become registered securities under
the Indenture and make other such changes to unregistered
securities that in each case do not materially and adversely affect
the interests of holders of outstanding Debt Securities;
• establish
the forms of the Debt Securities;
• appoint
a successor trustee under the Indenture;
• add
provisions to permit or facilitate the defeasance and discharge of
the Debt Securities as long as there is no material adverse effect
on the holders;
• cure
any ambiguity, correct or supplement any defective or inconsistent
provision or make any other provisions in each case that would not
materially and adversely affect the interests of holders of
outstanding Debt Securities, if any; or
• change
or eliminate any provisions of the Indenture where such change
takes effect when there are no Debt Securities outstanding which
are entitled to the benefit of those provisions under the
Indenture.
Governing Law
To the extent the Indenture is
governed by the Trust Indenture Act, the Indenture and the Debt
Securities will be governed by and construed in accordance with the
laws of the State of New York.
The Trustee
The Trustee under the Indenture or
its affiliates may provide banking and other services to the
Corporation in the ordinary course of its business.
The Indenture will contain certain
limitations on the rights of the Trustee, as long as it or any of
its affiliates remains the Corporation's creditor, to obtain
payment of claims in certain cases or to realize on certain
property received on any claim as security or otherwise. The
Trustee and its affiliates will be permitted to engage in other
transactions with the Corporation. If the Trustee or any affiliate
acquires any conflicting interest and a default occurs with respect
to the Debt Securities, the Trustee must eliminate the conflict or
resign.
Resignation and Removal of
Trustee
A trustee may resign or be removed
with respect to one or more series of the Debt Securities and a
successor trustee may be appointed to act with respect to such
series.
Consent to Jurisdiction and
Service
Under the Indenture and to the
extent the Indenture is governed by the laws of New York, the
Corporation will irrevocably appoint an authorized agent upon which
process may be served in any suit, action or proceeding arising out
of or relating to the Offered Debt Securities or the Indenture that
may be instituted in any United States federal or New York state
court located in the City of New York, and will submit to such
non-exclusive jurisdiction.
Subscription Receipts
The Subscription Receipts may be
issued under a subscription receipt agreement. Subscription
Receipts may be offered separately or together with other
Securities, as the case may be. The applicable Prospectus
Supplement will include details of the subscription receipt
agreement, if any, governing the Subscription Receipts being
offered. The Corporation will file a copy of any subscription
receipt agreement, if any, relating to an offering of Subscription
Receipts with the relevant securities regulatory authorities in
Canada after it has been entered into by the Corporation.
Each applicable Prospectus
Supplement will set forth the terms and other information with
respect to the Subscription Receipts being offered thereby, which
may include, without limitation, the following (where
applicable):
• the
aggregate number of Subscription Receipts offered;
• the
price at which the Subscription Receipts will be offered;
• the
terms, conditions and procedures for the conversion of the
Subscription Receipts into other Securities;
• the
dates or periods during which the Subscription Receipts are
convertible into other Securities;
• the
designation, number and terms of the other Securities that may be
exchanged upon conversion of each Subscription Receipt;
• the
designation, number and terms of any other Securities with which
the Subscription Receipts will be offered, if any, and the number
of Subscription Receipts that will be offered with each
Security;
• whether
such Subscription Receipts are to be issued in registered form,
"book-entry only" form, bearer form or in the form of temporary or
permanent global securities and the basis of exchange, transfer and
ownership thereof;
• terms
applicable to the gross or net proceeds from the sale of the
Subscription Receipts plus any interest earned thereon;
• certain
material Canadian and United States tax consequences of owning the
Subscription Receipts; and
• any
other material terms and conditions of the Subscription
Receipts.
Warrants
Each series of Warrants may be
issued under a separate warrant indenture or warrant agency
agreement to be entered into between the Corporation and one or
more banks or trust companies acting as Warrant agent or may be
issued as stand-alone certificates. Warrants may be offered
separately or together with other Securities, as the case may be.
The applicable Prospectus Supplement will include details of the
Warrant agreements, if any, governing the Warrants being offered.
The Warrant agent, if any, will be expected to act solely as the
agent of the Corporation and will not assume a relationship of
agency with any holders of Warrant certificates or beneficial
owners of Warrants. A copy of any warrant indenture or any warrant
agency agreement relating to an offering of Warrants will be filed
by the Corporation with the relevant securities regulatory
authorities in Canada after it has been entered into by the
Corporation.
Each applicable Prospectus
Supplement will set forth the terms and other information with
respect to the Warrants being offered thereby, which may include,
without limitation, the following (where applicable):
• the
designation of the Warrants;
• the
aggregate number of Warrants offered and the offering price;
• the
designation, number and terms of the other Securities purchasable
upon exercise of the Warrants, and procedures that will result in
the adjustment of those numbers;
• the
exercise price of the Warrants;
• the
dates or periods during which the Warrants are exercisable
including any "early termination" provisions;
• the
designation, number and terms of any Securities with which the
Warrants are issued;
• if
the Warrants are issued as a unit with another Security, the date
on and after which the Warrants and the other Security will be
separately transferable;
• whether
such Warrants are to be issued in registered form, "book-entry
only" form, bearer form or in the form of temporary or permanent
global securities and the basis of exchange, transfer and ownership
thereof;
• any
minimum or maximum amount of Warrants that may be exercised at any
one time;
• whether
such Warrants will be listed on any securities exchange;
• any
terms, procedures and limitations relating to the transferability,
exchange or exercise of the Warrants;
• certain
material Canadian and United States tax consequences of owning the
Warrants; and
• any
other material terms and conditions of the Warrants.
Units
Units may be offered separately or
together with other Securities, as the case may be. Each applicable
Prospectus Supplement will set forth the terms and other
information with respect to the Units being offered thereby, which
may include, without limitation, the following (where
applicable):
• the
aggregate number of Units offered;
• the
price at which the Units will be offered;
• the
designation, number and terms of the Securities comprising the
Units;
• whether
the Units will be issued with any other Securities and, if so, the
amount and terms of these Securities;
• terms
applicable to the gross or net proceeds from the sale of the Units
plus any interest earned thereon;
• the
date on and after which the Securities comprising the Units will be
separately transferable;
• whether
the Securities comprising the Units will be listed on any
securities exchange;
• whether
such Units or the Securities comprising the Units are to be issued
in registered form, "book-entry only" form, bearer form or in the
form of temporary or permanent global securities and the basis of
exchange, transfer and ownership thereof;
• any
terms, procedures and limitations relating to the transferability,
exchange or exercise of the Units;
• certain
material Canadian and United States tax consequences of owning the
Units; and
• any
other material terms and conditions of the Units.
PLAN OF DISTRIBUTION
The Corporation may from time to
time during the 25-month period that this Prospectus, including any
amendments hereto, remains valid, offer for sale and issue up to an
aggregate of $500,000,000 in Securities hereunder. The Corporation
may offer and sell the Securities to or through underwriters,
agents, or dealers purchasing as principals, and may also sell
directly to one or more purchasers or through agents or pursuant to
applicable statutory exemptions.
The Prospectus Supplement relating
to a particular offering of Securities will identify each
underwriter, dealer or agent, as the case may be, engaged by the
Corporation in connection with the offering and sale of the
Securities, and will set forth the terms of the offering of such
Securities, including, to the extent applicable, any fees,
discounts or any other compensation payable to underwriters,
dealers or agents in connection with the offering, the method of
distribution of the Securities, the initial issue price, the
proceeds that the Corporation will receive and any other material
terms of the plan of distribution. Any initial offering price and
discounts, concessions or commissions allowed or re-allowed or paid
to dealers may be changed from time to time.
The Securities may be sold from
time to time in one or more transactions at a fixed price or prices
or at prices which may be changed or at market prices prevailing at
the time of sale, at prices related to such prevailing prices or at
negotiated prices, including sales in transactions that are deemed
to be "at-the-market distributions" as defined in National
Instrument 44-102 - Shelf Distributions of the Canadian
Securities Administrators, including sales made directly on the
TSX, the NASDAQ or other existing trading markets for the
Securities. Any such transactions that are deemed
"at-the-market-distributions" will be subject to regulatory
approval. No underwriter, dealer or agent, no affiliate of such an
underwriter, dealer or agent and no person acting jointly or in
concert with such an underwriter, dealer or agent involved in an
"at-the-market distribution" will over-allot Securities in
connection with such distribution or effect any other transactions
that are intended to stabilize or maintain the market price of the
Securities.
The price at which the Securities
will be offered and sold may vary from purchaser to purchaser and
during the period of distribution.
In connection with the sale of the
Securities, underwriters, dealers or agents may receive
compensation, including in the form of underwriters', dealers' or
agents' fees, commissions or concessions. Underwriters, dealers and
agents that participate in the distribution of the Securities may
be deemed to be underwriters for the purposes of applicable
Canadian securities legislation and any such compensation received
by them from the Corporation and any profit on the resale of the
Securities by them may be deemed to be underwriting commissions. In
connection with any offering of Securities, except as otherwise set
out in a Prospectus Supplement relating to a particular offering of
Securities and other than in relation to an "at-the-market"
distribution, the underwriters, dealers or agents, as the case may
be, may over-allot or effect transactions intended to fix,
stabilize, maintain or otherwise affect the market price of the
Securities at a level other than those which otherwise might
prevail on the open market. Such transactions may be commenced,
interrupted or discontinued at any time.
Underwriters, dealers or agents who
participate in the distribution of the Securities may be entitled,
under agreements to be entered into with the Corporation, to
indemnification by the Corporation against certain liabilities,
including liabilities under Canadian securities legislation and the
U.S. Securities Act, or to contribution with respect to payments
which such underwriters, dealers or agents may be required to make
in respect thereof. Such underwriters, dealers and agents may be
customers of, engage in transactions with, or perform services for,
the Corporation in the ordinary course of business.
Unless otherwise specified in the
applicable Prospectus Supplement, each series or issue of
Securities (other than Common Shares) will be a new issue of
Securities with no established trading market. Accordingly, there
is currently no market through which the Securities (other than
Common Shares) may be sold and purchasers may not be able to resell
such Securities purchased under this Prospectus and the applicable
Prospectus Supplement. This may affect the pricing of such
Securities in the secondary market, the transparency and
availability of trading prices, the liquidity of such Securities
and the extent of issuer regulation. See "Risk Factors".
EARNINGS COVERAGE RATIOS
Earnings coverage ratios will be
provided in the applicable Prospectus Supplement(s) with respect to
any issuance and sale of Debt Securities pursuant to this
Prospectus.
PRIOR SALES
The Corporation previously filed a
base shelf prospectus on November 22, 2019 (the "2019
Prospectus"). All capital raising activities pursuant to the
2019 Prospectus have been completed. Information regarding prior
sales of Securities will be provided as required in a Prospectus
Supplement with respect to the issuance of Securities pursuant to
such Prospectus Supplement.
TRADING PRICE AND VOLUME
Information regarding trading price
and volume of the Securities will be provided as required for all
of the Corporation's issued and outstanding Securities that are
listed on any securities exchange, as applicable, in each
Prospectus Supplement.
CERTAIN CANADIAN AND UNITED
STATES FEDERAL INCOME TAX CONSIDERATIONS
The applicable Prospectus
Supplement may describe certain Canadian federal income tax
consequences to an investor acquiring any Securities offered
thereunder, including, for investors who are non-residents of
Canada, whether the payments of principal, interest or
distributions, if any, on the Securities will be subject to
Canadian non-resident withholding tax.
The applicable Prospectus
Supplement may also describe certain U.S. federal income tax
consequences of the acquisition, ownership and disposition of any
Securities offered thereunder by an initial investor who is a U.S.
person (within the meaning of the U.S. Internal Revenue Code of
1986, as amended).
Prospective investors should
consult their own tax advisers prior to deciding to purchase any of
the Securities.
RISK FACTORS
Before deciding to invest in any
Securities, prospective investors of the Securities should consider
carefully the risk factors and the other information contained and
incorporated by reference in this Prospectus and the applicable
Prospectus Supplement relating to a specific offering of Securities
before purchasing the Securities, including those risks identified
and discussed under the heading "Risk Factors" in the Annual
Information Form, which is incorporated by reference herein. See
"Documents Incorporated by Reference".
An investment in the Securities
offered hereunder is speculative and involves a high degree of
risk. Additional risks and uncertainties, including those that the
Corporation is unaware of or that are currently deemed immaterial,
may also become important factors that affect the Corporation and
its business. If any such risks actually occur, the Corporation's
business, financial condition and results of operations could be
materially adversely affected. Prospective investors should
carefully consider the risks below and in the Annual Information
Form and the other information elsewhere in this Prospectus and the
applicable Prospectus Supplement and consult with their
professional advisers to assess any investment in the
Corporation.
There is no guarantee that
the Securities will earn any positive return in the short term or
long term.
A holding of Securities is
speculative and involves a high degree of risk and should be
undertaken only by holders whose financial resources are sufficient
to enable them to assume such risks and who have no need for
immediate liquidity in their investment. A holding of Securities is
appropriate only for holders who have the capacity to absorb a loss
of some or all of their holdings.
Management of the Corporation
will have broad discretion with respect to the application of net
proceeds received by the Corporation from the sale of Securities
under this Prospectus and a future Prospectus
Supplement.
Management of the Corporation may
spend net proceeds received by the Corporation from a sale of
Securities in ways that do not improve the Corporation's results of
operations or enhance the value of the Common Shares or its other
securities issued and outstanding from time to time. Any failure by
management to apply these funds effectively could result in
financial losses that could have a material adverse effect on the
Corporation's business or cause the price of the securities of the
Corporation issued and outstanding from time to time to
decline.
The Corporation may sell
additional Common Shares or other Securities that are convertible
or exchangeable into Common Shares in subsequent offerings or may
issue additional Common Shares or other Securities to finance
future acquisitions.
The Corporation cannot predict the
size or nature of future sales or issuances of securities or the
effect, if any, that such future sales and issuances will have on
the market price of the Common Shares. Sales or issuances of
substantial numbers of Common Shares or other Securities that are
convertible or exchangeable into Common Shares, or the perception
that such sales or issuances could occur, may adversely affect
prevailing market prices of the Common Shares. With any additional
sale or issuance of Common Shares or other Securities that are
convertible or exchangeable into Common Shares, investors will
suffer dilution to their voting power and economic interest in the
Corporation. Furthermore, to the extent holders of the
Corporation's stock options or other convertible securities convert
or exercise their securities and sell the Common Shares they
receive, the trading price of the Common Shares may decrease due to
the additional amount of Common Shares available in the market.
The market price for the
Common Shares may be volatile and subject to wide fluctuations in
response to numerous factors, many of which are beyond the
Corporation's control.
The factors which may contribute to
market price fluctuations of the Common Shares include the
following:
• actual
or anticipated fluctuations in the Corporation's quarterly results
of operations;
• recommendations
by securities research analysts;
• changes
in the economic performance or market valuations of companies in
the industry in which the Corporation operates;
• addition
or departure of the Corporation's executive officers and other key
personnel;
• release
or expiration of transfer restrictions on outstanding Common
Shares;
• sales
or perceived sales of additional Common Shares;
• operating
and financial performance that vary from the expectations of
management, securities analysts and investors;
• regulatory
changes affecting the Corporation's industry generally and its
business and operations;
• announcements
of developments and other material events by the Corporation or its
competitors;
• fluctuations
to the costs of vital production materials and services;
• changes
in global financial markets and global economies and general market
conditions, such as interest rates and pharmaceutical product price
volatility;
• significant
acquisitions or business combinations, strategic partnerships,
joint ventures or capital commitments by or involving the
Corporation or its competitors;
• operating
and share price performance of other companies that investors deem
comparable to the Corporation or from a lack of market comparable
companies;
• news
reports relating to trends, concerns, technological or competitive
developments, regulatory changes and other related issues in the
Corporation's industry or target markets; and
• current
and future global economic, political and social conditions,
including the COVID-19 pandemic.
The Corporation has not
declared and paid dividends in the past and may not declare and pay
dividends in the future.
Any decision to declare and pay
dividends in the future will be made at the discretion of the
Corporation's Board and will depend on, among other things,
financial results, cash requirements, contractual restrictions and
other factors that the Corporation's Board may deem relevant. As a
result, investors may not receive any return on an investment in
the Common Shares unless they sell their Common Shares for a price
greater than that which such investors paid for them.
There is currently no market
through which the Securities, other than the Common Shares, may be
sold and, unless otherwise specified in the applicable Prospectus
Supplement, none of the Preferred Shares, Debt Securities,
Warrants, Subscription Receipts or Units will be listed on any
securities or stock exchange.
As a consequence, purchasers may
not be able to resell the Preferred Shares, Debt Securities,
Warrants, Subscription Receipts or Units purchased under this
Prospectus and any Prospectus Supplement. This may affect the
pricing of the Securities, other than the Common Shares, in the
secondary market, the transparency and availability of trading
prices, the liquidity of these securities and the extent of issuer
regulation. There can be no assurance that an active trading market
for the Securities, other than the Common Shares, will develop or,
if developed, that any such market, including for the Common
Shares, will be sustained.
Shareholders of the Corporation may
be unable to sell significant quantities of Common Shares into the
public trading markets without a significant reduction in the price
of their Common Shares, or at all. There can be no assurance that
there will be sufficient liquidity of the Common Shares on the
trading markets, or that the Corporation will continue to meet the
listing requirements of the TSX or maintain the listing on the
NASDAQ or any other public stock exchange.
Foreign Licensing
Requirements
The Corporation's ability to
achieve its business objectives in foreign jurisdictions is
contingent, in part, upon its compliance with regulatory
requirements enacted by governmental authorities and the
Corporation obtaining all regulatory approvals, where necessary,
for the sale of its products. The Corporation cannot predict how
long it will take to secure all appropriate regulatory approvals
for its products, or the extent of testing and documentation that
may be required by governmental authorities. The impact of the
various compliance regimes, any delays in obtaining, or failure to
obtain regulatory approvals may significantly delay or impact the
development of markets, products and sales initiatives and could
have a material adverse effect on the Corporation's business,
financial condition, results of operations and prospects.
The Corporation continues to
monitor developments and policies in the foreign jurisdictions in
which it operates and assess the impact thereof to its operations;
however, such developments cannot be accurately predicted and could
have an adverse effect on the Corporation's business, financial
condition and results of operations and prospects.
Adequacy of Internal Control
over Financial Reporting.
Disclosure controls and procedures
("DC&P") are intended to provide reasonable assurance
that material information is gathered and reported to senior
management to permit timely decisions regarding public disclosure.
Internal controls over financial reporting ("ICFR") are
intended to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements
for external purposes with IFRS. Any failure to implement required
new or improved controls, or difficulties encountered in their
implementation, could cause the Corporation to fail to meet its
reporting obligations.
As a venture issuer (as defined by
National Instrument 52-102 - Continuous Disclosure
Obligations) until May 21, 2019, the Corporation was not
required to provide representations in its annual and interim
filings relating to the establishment and maintenance of DC&P
and ICFR as defined in National Instrument 52-109 -
Certification of Disclosure in Issuers' Annual and Interim
Filings ("NI 52-109").
As a non-venture issuer the
Corporation is required to evaluate ICFR in a manner that meets the
standards of NI 52-109 in Canada. The Corporation has developed and
implemented NI 52-109 compliant DC&P and ICFR as of the end of
the Corporation's first full quarter as a non-venture issuer, being
August 31, 2019. The process of designing and implementing
effective internal controls is a continuous effort that requires
the Corporation to anticipate and react to changes in the
Corporation's business and the economic and regulatory environments
and to expend significant resources to maintain a system of
internal controls that is adequate to satisfy the Corporation's
reporting obligations as a public company.
The U.S. Sarbanes-Oxley Act 2002,
as amended (the "U.S. Sarbanes-Oxley Act") requires that we
maintain effective disclosure controls and procedures and internal
control over financial reporting. Section 404(a) of the U.S.
Sarbanes-Oxley Act requires that our management assess and report
annually on the effectiveness our ICFR and identify any material
weaknesses in our ICFR. We have determined that we will cease
to be an "emerging growth company" (as defined in Rule 12b-2 under
the U.S. Exchange Act) on August 31, 2021 due to our becoming a
"large accelerated filer" (as defined in Rule 12b-2 under the U.S.
Exchange Act) as of that date. As an emerging growth company, we
have been eligible for an exemption section 404(b) of the U.S.
Sarbanes-Oxley Act that otherwise would have required our
independent registered public accounting firm to issue an annual
attestation report that addresses the effectiveness of our ICFR.
The Corporation expects to comply with section 404(b) of the U.S.
Sarbanes-Oxley Act in relation to its annual report on Form 40-F
under the U.S. Exchange Act for the year ending August 31, 2021,
whereby our auditor will be required to deliver an attestation
report on the effectiveness of our ICFR pursuant to the U.S.
Sarbanes-Oxley Act.
Any failure by the Corporation to
maintain effective ICFR could result in the loss of investor
confidence in the reliability of its financial statements, which in
turn could harm the Corporation's business and negatively impact
the trading price of its Common Shares. In addition, any failure to
implement required new or improved controls, or difficulties
encountered in their implementation, could harm the Corporation's
operating results or cause it to fail to meet its reporting
obligations.
There can be no assurance that the
Corporation will be able to remediate material weaknesses, if any,
identified in future periods, or maintain all the controls
necessary for continued compliance, and there can be no assurance
that the Corporation will be able to retain sufficient skilled
finance and accounting personnel, especially in light of the
increased demand for such personnel among publicly traded
companies. Future acquisitions of companies may provide the
Corporation with challenges in implementing the required processes,
procedures and controls in its acquired operations. Acquired
companies may not have disclosure controls and procedures or
internal control over financial reporting that are as thorough or
effective as those required by the securities laws currently
applicable to the Corporation.
No evaluation can provide complete
assurance that the Corporation's ICFR will detect or uncover all
failures of persons within the Corporation to disclose material
information otherwise required to be reported. The effectiveness of
the Corporation's controls and procedures could also be limited by
simple errors or faulty judgment. The challenges involved in
implementing appropriate ICFR will likely increase with the
Corporation's plans for ongoing development of its business and
this will require that the Corporation continue to improve its
internal controls over financial reporting. Although the
Corporation intends to devote substantial time and incur costs, as
necessary, to ensure ongoing compliance, the Corporation cannot be
certain that it will be successful in maintaining effective ICFR or
complying with NI 52-109 in Canada and, when applicable, the U.S.
Sarbanes-Oxley Act in the United States.
The Corporation is a "foreign
private issuer" within the meaning of the rules under the U.S.
Exchange Act, and as such is exempt from certain provisions
applicable to United States domestic public companies.
Because the Corporation is a
"foreign private issuer" under the U.S. Exchange Act, it is exempt
from certain provisions of the securities rules and regulations in
the United States that are applicable to U.S. domestic issuers,
including:
• the
rules under the U.S. Exchange Act requiring the filing of quarterly
reports on Form 10-Q or current reports on Form 8-K with the
SEC;
• the
sections of the U.S. Exchange Act regulating the solicitation of
proxies, consents or authorizations in respect of a security
registered under the U.S. Exchange Act;
• the
sections of the U.S. Exchange Act requiring insiders to file public
reports of their stock ownership and trading activities and
liability for insiders who profit from trades made in a short
period of time; and
• the
selective disclosure rules by issuers of material non-public
information under Regulation FD.
The Corporation is required to file
an annual report on Form 40-F with the United States Securities and
Exchange Commission within three months of the end of each fiscal
year. The Corporation does not intend to voluntarily file annual
reports on Form 10-K and quarterly reports on Form 10-Q in lieu of
Form 40-F requirements. For so long as the Corporation chooses to
only comply with foreign private issuer requirements, the
information it is required to file with or furnish to the SEC will
be less extensive and less timely compared to that required to be
filed with the SEC by U.S. domestic issuers. As a result, you may
not be afforded the same protections or information which would be
made available to you if you were investing in a U.S. domestic
issuer.
The Corporation does not
currently have a Chief Executive Officer.
Effective April 30, 2021, Greg
Engel, the Corporation's former Chief Executive Officer stepped
away from his role. The departure of a Chief Executive Officer
requires the Corporation to undergo a transition that brings with
it a measure of uncertainty and risk that is impossible to quantify
or mitigate in its entirety. There can be no assurances that
consequences of Mr. Engel's departure will not have an adverse
effect on the Corporation. The Corporation has mitigated this
risk through the appointment of Beena Goldenberg as Chief Executive
Officer effective September 9, 2021.
The Debt Securities may be
unsecured and will rank equally in right of payment with all of our
other future unsecured debt.
The Debt Securities may be
unsecured and will rank equally in right of payment with all of our
other existing and future unsecured debt. The Debt Securities may
be effectively subordinated to all of our existing and future
secured debt to the extent of the assets securing such debt. If we
are involved in any bankruptcy, dissolution, liquidation or
reorganization, the secured debt holders would, to the extent of
the value of the assets securing the secured debt, be paid before
the holders of unsecured debt securities, including the debt
securities. In that event, a holder of Debt Securities may not be
able to recover any principal or interest due to it under the Debt
Securities.
In addition, the collateral, if
any, and all proceeds therefrom, securing any Debt Securities may
be subject to higher priority liens in favour of other lenders and
other secured parties which may mean that, at any time that any
obligations that are secured by higher ranking liens remain
outstanding, actions that may be taken in respect of the collateral
(including the ability to commence enforcement proceedings against
the collateral and to control the conduct of such proceedings) may
be at the direction of the holders of such indebtedness.
Negative cash flow from
operations
During the year ended August 31,
2020, the Corporation had negative cash flow from operating
activities. Although the Corporation anticipates it will have
positive cash flow from operating activities in future periods, the
Corporation cannot guarantee it will have a cash flow positive
status in the future due to its desire to increase the number of
employees and its level of investment in the adult-use recreational
market in Canada. To the extent that the Corporation has negative
cash flow in any future period, certain of the proceeds from its
offerings may be used to fund such negative cash flow from
operating activities.
EXEMPTION FROM NATIONAL
INSTRUMENT 44-102
Pursuant to a decision of the
Autorité des marchés financiers dated June 17, 2021, the
Corporation was granted a permanent exemption from the requirement
to translate into French this Prospectus as well as the documents
incorporated by reference therein and any Prospectus Supplement to
be filed in relation to an "at-the-market" distribution. This
exemption is granted on the condition that this Prospectus and any
Prospectus Supplement (other than in relation to an "at-the-market"
distribution) be translated into French if the Corporation offers
Securities to Québec purchasers in connection with an offering
other than in relation to an "at-the-market" distribution.
LEGAL MATTERS AND INTEREST OF
EXPERTS
Unless otherwise specified in the
Prospectus Supplement relating to an offering and sale of
Securities, certain legal matters relating to such offering and
sale of Securities will be passed upon on behalf of the Corporation
by Goodmans LLP with respect to matters of Canadian law and by
McMillan LLP with respect to matters of United States law. In
addition, certain legal matters in connection with an offering and
sale of Securities will be passed upon for any underwriters,
dealers or agents by counsel to be designated at the time of such
offering and sale by such underwriters, dealers or agents with
respect to matters of Canadian and, if applicable, United States or
other foreign law. As at the date hereof, the partners and
associates of Goodmans LLP and McMillan LLP, as a group, own less
than 1% of the outstanding securities of the Corporation.
AUDITORS, TRANSFER AGENT AND
REGISTRAR
The Corporation's current external
auditors are KPMG LLP, located at Suite 1400, 100 New Park Place,
Vaughan, Ontario, L4K 0J3. KPMG LLP have confirmed with respect to
the Corporation that they are independent within the meaning of the
relevant rules and regulations prescribed by the relevant
professional bodies in Canada and any applicable legislation or
regulations.
The consolidated financial
statements of Corporation as at and for the years ended August 31,
2020 and 2019 have been audited by Deloitte LLP. As of November 29,
2020, and throughout the period covered by the August 31, 2020 and
2019 financial statements on which they reported, Deloitte LLP was
independent of the Corporation within the meaning of the rules of
professional conduct of Chartered Professional Accountants of New
Brunswick and within the meaning of the U.S. Securities Act and the
applicable rules and regulations thereunder adopted by the SEC and
the Public Company Accounting Oversight Board (United States).
The transfer agent and registrar of
the Corporation is TSX Trust Company at its offices in Vancouver,
British Columbia and Toronto, Ontario. VStock Transfer, LLC is the
Corporation's co-transfer agent in the United States.
DOCUMENTS FILED AS PART OF THE
REGISTRATION STATEMENT
The following documents will be
filed with the SEC as part of the registration statement to which
this Prospectus forms a part: (a) the documents listed under
"Documents Incorporated by Reference"; (b) the consent of
the Corporation's predecessor external auditors; (c) powers of
attorney from the Corporation's directors and officers included on
the signature pages of the registration statement; and (d) a copy
of the form of the Indenture for the Debt Securities. A copy of the
form of any applicable warrant agreement or subscription receipt
agreement will be filed by post-effective amendment or by
incorporation by reference to documents filed or furnished with the
SEC under the U.S. Exchange Act.
STATUTORY AND CONTRACTUAL RIGHTS
OF WITHDRAWAL AND RESCISSION
Unless otherwise provided in a
Prospectus Supplement, the following is a description of a
purchaser's statutory rights. Securities legislation in certain of
the provinces and territories of Canada provides purchasers with
the right to withdraw from an agreement to purchase securities,
which right may be exercised within two business days after receipt
or deemed receipt of a prospectus, prospectus supplement and any
amendment, and with remedies for rescission or, in some
jurisdictions, revisions of the price, or damages if the
prospectus, prospectus supplement, and any amendment relating to
securities purchased by a purchaser are not sent or delivered to
the purchaser. However, purchasers of Securities distributed under
an at-the-market distribution by the Corporation do not have the
right to withdraw from an agreement to purchase the Securities and
do not have remedies of rescission or, in some jurisdictions,
revisions of the price, or damages for non-delivery of the
prospectus, prospectus supplement, and any amendment relating to
the Securities purchasers by such purchaser because the prospectus,
prospectus supplement, and any amendment relating to the Securities
purchased by such purchaser will not be sent or delivered, as
permitted under Part 9 of NI 44-102.
In several of the provinces and
territories, the securities legislation further provides a
purchaser with remedies for rescission or, in some jurisdictions,
revisions of the price or damages if the prospectus, prospectus
supplement, and any amendment relating to securities purchased by a
purchaser contains a misrepresentation. The remedies available to a
purchaser for any such failure to deliver or any misrepresentation
contained in any prospectus, prospectus supplement or amendment
must be exercised by the purchaser within the time limit prescribed
by the securities legislation of the purchaser's province or
territory. Any remedies under securities legislation that a
purchaser of such securities distributed under an at-the-market
distribution by the Corporation may have against the Corporation or
its agents for rescission or, in some jurisdictions, revisions of
the price, or damages if the prospectus, prospectus supplement, and
any amendment relating to securities purchased by a purchaser
contain a misrepresentation, will remain unaffected by the
non-delivery of the prospectus referred to above. A purchaser
should refer to any applicable provisions of the securities
legislation of the purchaser's province or territory for the
particulars of these rights or consult with a legal advisor.
In an offering of Securities which
are convertible, exchangeable or exercisable for other securities
of the Corporation, investors are cautioned that the statutory
right of action for damages for a misrepresentation contained in
the prospectus is limited, in certain provincial and territorial
securities legislation, to the price at which the convertible
securities are offered to the public under the prospectus offering.
This means that, under the securities legislation of certain
provinces and territories, if the purchaser pays additional amounts
upon conversion of the security, those amounts may not be
recoverable under the statutory right of action for damages that
applies in those provinces and territories. The purchaser should
refer to any applicable provisions of the securities legislation of
the purchaser's province or territory for the particulars of these
rights and/or consult with a legal advisor.
Original purchasers of Securities
which are convertible, exchangeable or exercisable for other
securities of the Corporation will have a contractual right of
rescission against the Corporation in respect of the conversion,
exchange or exercise of such Securities. The contractual right of
rescission will entitle such original purchasers to receive, upon
surrender of the underlying securities, the amount paid for the
applicable convertible, exchangeable or exercisable Securities (and
any additional amount paid upon conversion, exchange or exercise)
in the event that this Prospectus, the applicable Prospectus
Supplement or an amendment thereto contains a misrepresentation,
provided that: (i) the conversion, exchange or exercise takes place
within 180 days of the date of the purchase of such Securities
under this Prospectus and the applicable Prospectus Supplement; and
(ii) the right of rescission is exercised within 180 days of the
date of the purchase of such Securities under this Prospectus and
the applicable Prospectus Supplement. This contractual right of
rescission will be consistent with the statutory right of
rescission described under Section 149 of the Securities Act
(New Brunswick) and is in addition to any other right or remedy
available to original purchasers under Section 149 of the
Securities Act (New Brunswick) or otherwise at law.
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